Suppose that low-productivity workers all have marginal products of 10 and high-productivity workers all have marginal products of 16.The community has equal numbers of each type of worker.The local community college offers a course in microeconomics.High-productivity workers think taking this course is as bad as a wage cut of $3, and low-productivity workers think it is as bad as a wage cut of $5.
A)There is a separating equilibrium in which high-productivity workers take the course and are paid $19 and low-productivity workers do not take the course and are paid $10.
B)There is no separating equilibrium and no pooling equilibrium.
C)There is a separating equilibrium in which high-productivity workers take the course and are paid $16 and low-productivity workers do not take the course and are paid $10.
D)There is no separating equilibrium, but there is a pooling equilibrium in which everybody is paid $13.
E)There is a separating equilibrium in which high-productivity workers take the course and are paid $16 and low-productivity workers are paid $13.

Question

Quizplus · Accepted Answer

The Answer is C

Suppose That Low-Productivity Workers All Have Marginal Products of 10