MYECON LAB W/PEARSON ETEXT MICROECON>IP
9th Edition
ISBN: 9780134153988
Author: PINDYCK
Publisher: PEARSON
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Question
Chapter 17, Problem 11E
(a)
To determine
Calculate the expected profit of the firm.
(b)
To determine
Calculate the expected profit of the firm and effort that maximizes the wage.
(C)
To determine
Calculate the expected profit of the firm and effort that maximizes the wage.
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Imagine a signaling model where there are two types of workers, low-productivity workers with a productivity of 10, and high-productivity workers with a productivity of 30. The proportion of low-productivity workers is .5.
Firms are competitive and obtain profit equal to the productivity of the worker they hire.
Workers can obtain one of three levels of education: e1, e2, and e3. Workers get utility equal to their wage minus the cost of education. Wages must be between 10 and 30.
The cost of getting an education for low-productivity workers is e1 = 0, e2 = 9, e3 = 18.
The cost of getting an education for high-productivity workers is e1 = 0, e2 =4, e3 = 8.
Are there any separating equilibria in this model? If so, find them, if not show why they do not exist.
Imagine a signaling model where there are two types of workers, low-productivity workers with a productivity of 10, and high-productivity workers with a productivity of 30. The proportion of low-productivity workers is .5.
Firms are competitive and obtain profit equal to the productivity of the worker they hire.
Workers can obtain one of three levels of education: e1, e2, and e3. Workers get utility equal to their wage minus the cost of education. Wages must be between 10 and 30.
The cost of getting an education for low-productivity workers is e1 = 0, e2 = 9, e3 = 18.
The cost of getting an education for high-productivity workers is e1 = 0, e2 =4, e3 = 8.
A) Are there any pooling equilibria in this model? If so find all of them, if not, show why they do not exist.
Many police officer positions require the applicant to have a college degree, even though the tasks of a police officer rarely call upon college course material.
Suppose two individuals who do not have college degrees are considering applying to the police force. Ginny is considering applying for an officer position and plans on working for the police force for a period of time, over which she would earn approximately $500,000 (in present discounted value) in earnings while in the position. Kenji is also considering applying, and plans on working as an officer for a period of time, over which he would earn approximately $10,000 (in present discounted value) in lifetime earnings while in the position. Also suppose that present value of obtaining a college degree, which is required to submit a job application to the police department, is $100,000.
Use the following table to indicate whether each individual would likely apply, or not, given the cost of obtaining a college degree.…
Chapter 17 Solutions
MYECON LAB W/PEARSON ETEXT MICROECON>IP
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