Assume there is a group of students who are going to go to college. Their choices are St. Bonaventure or Siena. Assume that the financial cost of both colleges is equal. St. Bonaventure is an easy school that anyone can pass, so going to St. Bonaventure has a very low mental and effort cost - in fact, a mental and effort cost of 0 for all the students. Siena is a more challenging school that will require some mental struggle to graduate, which imposes a cost. How high this cost is depends on the type of student. Students who pay attention and work hard will be able to pass Siena at a moderate cost in terms of stress and effort - cM. Students who do not pay attention, procrastinate, and don't do careful work will find passing Siena very costly in terms of time and stress, so their cost is cH. Note that cH > cM. Employers want to hire students who pay attention and work hard. Workers of this type will be paid a salary of $50,000. Workers who don't pay attention, procrastinate, etc. will be paid a salary of $40,000.

(a) If the students are 50% careful, attentive types and 50% the type that don't pay attention, and cM = $2, 000, what range of values for cH will lead to a separating equilibrium?