Figure 21.2 shows the benefit functions for low-ability workers and high-ability workers (A and B),along with one indifference curve for each worker type (C and D).The employer cannot observe worker type directly but has created two positions,E and F,as a screening mechanism.Which of the following is true?
A)High- and low-ability workers will choose position E.
B)High-ability workers will choose position E and low ability workers will choose position F.
C)High- and low-ability workers will choose position F.
D)High-ability workers will choose position F and low ability workers will choose position E.

Question

Figure 21.2 shows the benefit functions for low-ability workers and high-ability workers (A and B),along with one indifference curve for each worker type (C and D).The employer cannot observe worker type directly but has created two positions,E and F,as a screening mechanism.Which of the following is true? 
A)High- and low-ability workers will choose position E. 
B)High-ability workers will choose position E and low ability workers will choose position F. 
C)High- and low-ability workers will choose position F. 
D)High-ability workers will choose position F and low ability workers will choose position E.

Quizplus · Accepted Answer

The Answer of Figure 21.2 shows the benefit functions for low-ability workers and high-ability workers (A and B),along with one indifference curve for each worker type (C and D).The employer cannot observe worker type directly but has created two positions,E and F,as a screening mechanism.Which of the following is true? 
A)High- and low-ability workers will choose position E. 
B)High-ability workers will choose position E and low ability workers will choose position F. 
C)High- and low-ability workers will choose position F. 
D)High-ability workers will choose position F and low ability workers will choose position E.

Figure 212 Shows the Benefit Functions for Low-Ability Workers and High-Ability