A restaurant pays each waiter a salary and allows no tipping. The opportunity wage of good waiters (wg) is greater than the opportunity wage of bad waiters (wb). If the restaurant sets its salary equal to or greater than wg, it will attract

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If the restaurant sets its salary equal to or greater than the opportunity wage of good waiters (wg), it will attract both good and bad waiters because the salary is attractive enough for both groups. Bad waiters would also be interested since the salary is higher than their opportunity wage (wb), and good waiters would be attracted because their opportunity wage is met or exceeded.

A Restaurant Pays Each Waiter a Salary and Allows No