Suppose that each worker has either high or low ability. The figure shows the demand curves for high- and low- ability workers when workers' abilities are observable to employers, labeled Dµ and DL respectively. The figure also shows the supply curves for high- and low-ability workers. The curve SH and SL reflects the supply decisions of high-ability and low-ability workers, respectively.

Suppose that each worker has either high or low ability. The figure shows the demand curves for high- and low- ability workers when workers' abilities are observable to employers, labeled Dµ and DL respectively. The figure also shows the supply curves for high- and low-ability workers. The curve SH and SL reflects the supply decisions of high-ability and low-ability workers, respectively.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 5P

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