Suppose ﬁrms are able to hire labour from clearly identiﬁable markets such as the market for skilled labour, unskilled labour and semi-skilled labour. In other words, the labour market is under a _____ equilibrium.
A) pooling
B) partial
C) separating
D) Nash

Question

Quizplus · Accepted Answer

When firms can hire labor from clearly identifiable markets such as skilled, unskilled, and semi-skilled labor markets, it indicates a separating equilibrium. In a separating equilibrium, different types of labor (or more generally, agents in a market) are sorted into distinct categories or markets based on their characteristics, such as skill level in this context.

Suppose ﬁRms Are Able to Hire Labour from Clearly Identiﬁable