The wage of a known high-quality worker, wh, is 10,000. The wage ...

[james0929]

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

[chem1s3]

Answer to Question 1

A

Answer to Question 2

A