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Suppose there are two types of persons: high-ability and low-ability. The schooling required to obtain a particular diploma costs a high-ability person $8,000 per year, and it costs a low-ability person $10,001 per year. Firms wish to use this diploma as a signal of an individual’s ability. The firms intend to pay workers such that the present value of lifetime earnings for a worker without the diploma is $250,000 and the present value of lifetime earnings for a worker with the diploma is $450,000. (a) What range of years of education must be required to obtain this diploma in order for the diploma to be an effective signal of worker ability? (b) In a competitive labor market, how many years of education will be required to obtain this diploma in equilibrium? Briefly explain why this is the case.
What are the prime rate and the federal funds rate? What are the differences between the two: prime rate and federal fund rate?
Explain how a focus on core competency could be compatible with an expanding vertical boundary; with an expanding horizontal boundary
q.suppose the state is trying to decide how many miles of a very scenic river it should preserve. there are 100 people
soda consumption, the government has placed a tax of $4 per two-liter bottle that is added to the consumer’s bill at the checkout. Before the tax was imposed, what was the equilibrium quantity? After the tax is imposed, what is the equilibrium quanti..
Illustrate what does this imply about short-run and long-run Phillips curves in se two types of countries. Illustrate what does this imply about effectiveness of monetary and fiscal policy to reduce unemployment rate.
M1 money growth in the U.S. was about 15% in 2011 and 2012, and 10% in 2013. Over the same time period, the yield on 3-month Treasury bills was close to 0%. Given these high rates of money growth, why did interest rates stay so low, rather than incre..
In game theory, a player following a maximum strategy
Beasley Worldwide Data Destruction (BWDD) purchases a new computing center for $200 million. They estimate a life of 5 years and a salvage value of $40 million. BDWW uses MACRS depreciation in the five year category. They also estimate revenue at $10..
Supporters and opponents of partial privatization of Social Security agree that partial privatization plans would. Corporate welfare” is a term used by
Then make an argument for why the government may still prefer using the other approach.
Soundscape Enterprises manufactures Sonoblast, a device that produces a high-pitched reminder to telemarketers that they have once again disturbed you just when you were sitting 1⁄2 down to dinner. Give the formulas for the short-run production funct..
A monopolistic competitor is likely to advertise to: shift the demand curve for its product rightward. increase the perception of product differentiation in the minds of potential consumers. convey information about the product it is offering for sal..
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