Multiple Choice
The value of a worker's marginal product is $40 per hour for high-ability workers and $5 per hour for low-ability workers.The preferences of high-ability workers correspond to the utility function UH(E,W) = W - 5E,and the preferences of low-ability workers correspond to the utility function UL(E,W) = W - 8E.By law,everyone is required to attend at least ten years of school.Three-fourths of the population has low ability,and one-fourth has high ability.What can be said about the educational attainment of each type of worker in a separating equilibrium?
A) EL = 10; 10 < EH < 14.375
B) EL = 10; EH < 17
C) EL = 10; EH > 14.375
D) EL = 10; 14.375 < EH < 17
Correct Answer:
Verified
Correct Answer:
Verified
Q55: If in the model for educational attainment
Q56: The value of a worker's marginal product
Q57: In situations where there is a potential
Q58: Moral hazard occurs if one party to
Q59: When employers use screening to distinguish high-ability
Q60: The individual mandate in the Affordable Care
Q61: In order to induce desirable behavior,one might
Q62: If Vincent van Gogh cut off his
Q64: A salesperson works for a car dealership
Q65: Suppose all workers in a certain labor