Consider a hypothetical economy in which each worker has to decide whether to acquire education and become a high-skilled worker or remain low-skilled. Let IH and IL denote the incomes earned by a high- and low-skilled worker respectively. These incomes are defined as IH = (1 + f)H and as IL = (1 + f)L , where H and Lare constants (H > L) and 0s f sl is the fraction of the population that decides to become high skilled. The gain from education and acquiring skill is thus (IH - IL). However, 3 education and acquiring skill carries a positive cost of C (a constant). Assume that all individuals simultaneously choose whether to become skilled or not. a) Does there exist any complementarity in acquiring skill? Describe it. b) Suppose that H -L