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Suppose that both high-ability and low-ability workers can get an education, but it costs a low-ability worker four-times as much to get the same education. So, an education costs a high-ability worker 'c' dollars and a low-ability worker '4c' dollars. What is the smallest value of 'c' at which a separating equilibrium exists?

Suppose that both high-ability and low-ability workers can get an education, but it costs a low-ability worker four-times as much to get the same education. So, an education costs a high-ability worker 'c' dollars and a low-ability worker '4c' dollars. What is the smallest value of 'c' at which a separating equilibrium exists?

Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter12: Labor Markets And Labor Unions
Section: Chapter Questions
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Suppose that both high-ability and low-ability workers can get an education, but it costs a low-ability worker four-times as much to get the same education. So, an education costs a high-ability worker 'c' dollars and a low-ability worker '4c' dollars. What is the smallest value of 'c' at which a separating equilibrium exists?

6: Suppose high-ability workers generate $80,000 for a firm, and low-ability workers generate $40,000. There are many (unlimited) firms. Half of workers are high-ability and half are low-ability. Firms can observe education but not ability.
Transcribed Image Text:6: Suppose high-ability workers generate $80,000 for a firm, and low-ability workers generate $40,000. There are many (unlimited) firms. Half of workers are high-ability and half are low-ability. Firms can observe education but not ability.
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