The wage of a known high-quality worker, wh, is 10,000. The wage for a known low-quality worker, wl, is 4,000. The share of the work force that is of high quality, s, is 0.5. For what value of the cost, c, of a college education that serves only as a signal of a high-quality worker does a pooling equilibrium exist?
A) c > 3,000
B) c < 3,000
C) c < 1,000
D) c = 2,500
Question 2
The cost, c, of a college education that serves only as a signal of a high-quality worker is 10,000. The wage of a known high-quality worker, wh, is 30,000. The wage for a known low-quality worker, wl, is 10,000. For what value of the share of the work force that is of high quality, s, is a pooling equilibrium possible?
A) s > 0.5
B) s = 0
C) s = 0.25
D) s < 0.45
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