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Suppose in the Market for Labor Years of Education Is

Question 25

Multiple Choice

Suppose in the market for labor years of education is used as a signal of ability,and that there is a separating equilibrium such that high-ability workers receive EH years of education and low-ability workers receive EL years.Each of the following must be true about EL and EH EXCEPT:


A) EH cannot be so low that it is easy for low-ability workers to masquerade as high-ability workers.
B) EH cannot be so high that high-ability workers choose to masquerade as low-ability workers.
C) EH and EL cannot be equal.
D) EH may be higher or lower than EL.

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