Determine the equilibrium outcomes or a pooling

Assignment Help Microeconomics
Reference no: EM13198994

Consider the education signaling model presented in class. The motivated worker is paid $900,000 in terms of present value of lifetime income while the unmotivated worker is paid $750,000. The monetized disutility of getting an MBA degree (including the actual cost) is $10,000 for a motivated worker and $20,000 for the unmotivated worker. An employer does not know workers' motivation level.

a. Assume the proportion of motivated workers is 20%. Determine the equilibrium outcomes (wages and net payoffs to each type of worker) for a pooling and a separating equilibrium.

b. Assume the proportion of motivated workers is 50%. Determine the equilibrium outcomes (wages and net payoffs to each type of worker) for a pooling and a separating equilibrium.

c. Would the unmotivated worker always prefer a pooling equilibrium to a separating equilibrium? What about the motivated worker?

Reference no: EM13198994

Questions Cloud

How far apart are they after 1 hour : Car A and Car B leave the origin at noon. Car A travels north at 264 mph and car B travels east at 448 mph.
State organizational behavior terminology and concepts paper : Organizational Behavior Terminology and Concepts Paper · Write a 700 word paper in which you explain the following key concepts and terminology:
Compute the first quartile and third quartile : Compute the first quartile and third quartile.
How many of each did light bright warehouse sell : Light Bright Warehouse sells boxes of high efficiency light bulbs ($5 box) and switch plates ($10 each). In May, total sales were $42000. Customers bought 5 times as many boxes of light bulbs as switch plates. How many of each did Light Bright War..
Determine the equilibrium outcomes or a pooling : The monetized disutility of getting an MBA degree (including the actual cost) is $10,000 for a motivated worker and $20,000 for the unmotivated worker. An employer does not know workers' motivation level.
If a filled container of juice is selected at random : These probabilities represent the probability of one container out of the total sample having the specified characteristics. Half the containers are filled on machine I and the other half are filled on machine II.
State examples of email differences that cause frustration : "When Americans and Europeans email one another for buisness reasons, frustration often ensues." -Why, according to Weiner, is this so?
How fast is the area of the ripple increasing : A stone is tossed into a pond creating a circular ripple whose radius increases at a rate of 3 feet per second. In square feet per second, how fast is the area of the ripple increasing 15 seconds after the stone hits the water?
What conclusion can you make : if

Reviews

Write a Review

Microeconomics Questions & Answers

  Which type of market do individual firms have no incentive

The payoff matrix below shows the payoffs for two coffee manufacturers, Cambridge and Greystone, which are deciding whether to advertise. The blue payoffs show Cambridge's profit for different strategies selected by each firm. The orange payoffs s..

  How did this likely affect labours share in national income

Does an increase in the average annual labour income imply that the individual worker's labour income has increased and

  Why does your company not make any profits

Why does your company not make any profits? Show graphically and explain and you convince the king that it is the patriotic duty of every citizen to eat more spam.

  Market characteristics for pizza franchise

In what kind of market do you think your franchise operates (perfectly competitive, monopoly, monopolistically competitive, oligopoly)? What are the specific characteristics which make it this type of firm?

  Are there economies of scope

Your firm produces two products, Q1 and Q2. An economic consulting firm has estimated your cost function to be C (Q1, Q2) = 100 + Q1Q2 + (Q1)^2 + (Q2)^2.  Are there economies of scope?

  Cost function-avc-afc-atc and mc

An accountant for a car rental company was recently asked to report the firm's cost of producing various levels of output. What is the average fixed cost of producing 2 units of output? What is the average variable cost of producing 2 units of output..

  Calculate producer surplus with monopoly

Draw demand, marginal revenue and marginal cost curves. Calculate and show how much this firm will sell and what they will charge. Calculate producer surplus with monopoly and the consumer surplus with monopoly. How much would be produced if this wa..

  Calculate the monthly payment for a short-term loan

The owner of a flower shop needs a short-term loan to tide her business over until she completes the sale of some unused property.

  Investigations of antitrust behavior

The Microsoft antitrust trial (United States vs. Microsoft) has been one of the biggest investigations of antitrust behavior since the turn of the century. You are supporting the Government, research and present a cohesive argument to the other si..

  International Monetary Relation

Choose a United States multinational company. In terms of currency denomination, discuss how the company values its revenues and costs.

  Difference between a price ceiling and a price floor?

If a price ceiling is set below the market equilibrium, what will happen to the quality and future availability of the good.

  Difference between a monopoly and an oligopoly

Explain the difference between a monopoly and an oligopoly, and a cartel and provide an example of a monopoly, an oligopoly, and a cartel.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd