Question 2 Include steps/formula Consider the information below: For Group A the

Question

Question 2 Include steps/formula

Consider the information below:

For Group A the cost of attaining an educational level y is

            CA(y) = $6,000y

and for Group B the cost of attaining that level is

            CB (y) = $10,000y.

Employees will be offered $50,000 if they have y < y*, where y* is an education threshold determined by the employer. They will be offered $130,000 if they have y > y*.        

The highest level of y* that can be set and still have the high-productivity people choose to meet it is

A) 16.

B) 13 1/3.

C) 13.

D) 8.

E) 0.

The lowest level of y* that can be set and still have only the high-productivity people meet it is

A) 16.

B) 13 1/3.

C) 13.

D) 8.

E) 0.

If the threshold educational level y* is set at 10,

A) only individuals in Group A will attain it.

B) only individuals in Group B will attain it.

C) individuals in both groups will attain it.

D) no individuals will attain it.

E) some fraction of individuals in each group will attain it.

If the threshold educational level y* is set at 7,

A) only individuals in Group A will attain it.

B) only individuals in Group B will attain it.

C) individuals in both groups will attain it.

D) no individuals will attain it.

E) some fraction of individuals in each group will attain it.

If the threshold educational level y* is set at 14,

A) only individuals in Group A will attain it.

B) only individuals in Group B will attain it.

C) individuals in both groups will attain it.

D) no individuals will attain it.

E) some fraction of individuals in each group will attain it.

Explanation / Answer

1: 16

2: 8

3: Some fraction of individuals in each group will attain it

4: individuals in both groups will attain it

5: only individuals in group B will attain it

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