Figure 212 Shows the Benefit Functions for Low-Ability Workers and High-Ability

Multiple Choice

Figure 21.2 shows the benefit functions for low-ability workers and high-ability workers (A and B) ,along with one indifference curve for each worker type (C and D) .The employer cannot observe worker type directly but has created two positions,E and F,as a screening mechanism.The equilibrium shown here is:

A) a separating equilibrium.
B) a pooling equilibrium.
C) a market unraveling equilibrium.
D) an example of adverse selection.