5-55% of the population are low-productivity workers and 45% of the population a

Question

5-55% of the population are low-productivity workers and 45% of the population are high-productivity he present value of lifetime productivity for low-productivity workers is $175,000 and the workers is $225,000. School would cost vity for present value of lifetime produ 815,000 for the high-productivity workers and $25,000 for the low-productivity workers. cti (a) An employer could simply pay all types the same amount. How much would an employer pay? (b) High-productivity workers would like to signal to employers that they are high-productivity. In order to be a true signal, there are two requirements. What are they? (Your answer should be no more than 2 sentences).

Explanation / Answer

(a)
high productivity workers....225000 and add the cost or 15000 which is 240000
low productivity workers....175000 and add the cost of 25000 which is200000. therefore the total cost that the employer has to pay is 440000.

(b) the two requirements are
1. 45% of population are of high productivity, means the number of people who are actual productive is less.
2. The present value of lifetime of high productivity workers is 225000 which is more than the low productive workers.

(d) In the game theory, if all same players play with the same strategy, it is a pooling equlibrium and if all same players play with different strategy then it is separating equilibrium.

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