-Consider the Spence Education Game Depicted in Figure 16

Multiple Choice

-Consider the Spence Education Game depicted in Figure 16.4. In the figure, all payoffs are in thousands of dollars per month. Suppose that 30 percent of workers are low- productivity (LP) workers and 70 percent are high-productivity (HP) workers. Using pre- employment testing, the firm has determined that there is a 60 percent probability of hiring a high-school (HS) graduate who is also a high-productivity worker and a 75 percent probability of hiring a college (C) graduate who is a high-productivity worker. What is the firm's conditional expected payoff from hiring a high school graduate?

A) About $2,000
B) About $2,480
C) About $3,250
D) About $3,560
E) About $4,000.