7 Signaling (1 of 3)Suppose that 10 percent of workers are low-productivity types and 90 percent of workers are high-productivity types. Thepresent value of lifetime productivity for low-productivity types is $150.000 and the present value of lifetime productivity forhigh-productivity types is $200,000 The total cost of a year of ecucation for a low-productivity type is $30,000,How much would an employer pay in a pooling equilibrium?195.000P Question 7Signaling (2 of 3)Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. Would low-productivity workers willingly choose to go to school for 4 years?O Yes. The benefts of getting the required amourt of eduation outweigh the costs.• No. They would be better oft by not going to school.O No They would be better off by going to school for mare than 4 year Signaling (2 of 3)Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. Would low-productivity workers willingty choose to go to school for 4 years?O Yes. The benefits of getting the required amount of education outweigh the costs.No. They would be better off by not going to school,O No. They would be better off by going to school for more than 4 years.Question 8Signaling (3 of 3)Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. The existence of aseparating equilibrium will depend on the cost of education for high-productivity types. In this case, a separating equilbrium willexist if the cost of education for high-productivity types is less than X dollars per year. What is X?

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Signaling (1 of 3) Suppose that 10 percent of workers are low-productivity types and 90 percent of workers are high-productivity types. The present value of lifetime productivity for low-productivity types is $150.000 and the present value of lifetime productivity for high-productivity types is $200.000 The total cost of a year of ecucation for a low-productivity type is $30,000, How much would an employer pay in a pooling equilibrium?

Signaling (1 of 3) Suppose that 10 percent of workers are low-productivity types and 90 percent of workers are high-productivity types. The present value of lifetime productivity for low-productivity types is $150.000 and the present value of lifetime productivity for high-productivity types is $200.000 The total cost of a year of ecucation for a low-productivity type is $30,000, How much would an employer pay in a pooling equilibrium?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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