A large steel producer has two types of job offers: ED (Engineer Development) and EM (Engineer Mechanical). Both jobs require an Engineer degree. The ED job requires high analytical skills and computer software development to work in the steel plant. The market entry wage is $118,000. The EM job is less demanding and requires no software development knowledge. Market entry wage is $68,000 for an EM. The firms hiring policy is: Individuals successfully taking and passing w computer courses during college will be regarded as ED and paid $150,000; otherwise, he or she will be regarded as EM type and paid $70,000. EDs opportunity cost to complete a tough course is $3,000, and EMs opportunity cost to complete a tough course is $12,000 or an opportunity cost ratio of 1:4.

The w from the incentive-compatibility condition for ED is:

The w from the incentive-compatibility condition for EM is:

The w from the participation condition for ED is: