Consider the signaling model of educational choice. Imagine a society where you have two groups of people: majority group comprising more than half of the population, and a minority group comprising less than a half of the population. People in this country also differ by ability levels - they can can be of low and high ability, and both minority and majority groups include high and low ability people. Assume that a low abilitymajority individual has the same productivity as a low ability minority individual (both have marginal productivity of 5) and a highability majority individual has the same productivity as a high ability minority individual (both have marginal productivity of 10). Half of all majority workers and half of all minority workers are high ability. The firms do not observe workers' ability levels.

Firms assume that majority individuals with bachelor's degree must be high ability workers. However, because minority households have less wealth on average than majority households, firms do not assume that minority workers with less than bachelor's degree are low ability (as it may instead simply reflect the greater cost of education for those from families with fewer resources). As a result, firms pay different wages to majority workers based on their education, but treat all minorities the same regardless of their education.

Assume that the cost of getting bachelor's degree is 3 for high ability worker and 6 for low ability workers.

Assume that the firms pay workers their marginal product when worker's ability is reliably revealed by their educational choices.If the ability is not known, the worker is paid her expectedmarginal product.

a.) What wages will firms pay to majority workers with a bachelor's degree? Submit the answer rounded to the nearest integer.

b.) Use the same scenario as in Q1.

What wages will firms pay to majority workers withouta bachelor's degree?Submit the answer rounded to the nearest integer.

c.)

Based on your answers to Q1 and Q2, in the table below fill out the net benefit of each educational choice for majority workers, and then predict the education attainment of the majority workers. Bachelor's Degree No Bachelor's Degree High Ability Low Ability Both High and Low ability majority workers will acquire Bachelor's degree. O High ability majority worker will acquire Bachelor's degree, and Low ability majority workers will not acquire Bachelor's degree. O Neither ability type of majority workers will acquire Bachelor's degree Low ability majority worker will acquire Bachelor's degree, and High ability majority workers will not acquire Bachelor's degree.Based on your answers to Q4 and Q5, in the table below fill out the net benefit of each educational choice for minority workers, and then predict the education attainment of the minority workers. Bachelor's Degree No Bachelor's Degree High Ability Low Ability O High ability minority worker will acquire Bachelor's degree, while low ability minority workers will not acquire Bachelor's degree Both High and Low ability minority worker will acquire Bachelor's degree. Neither high no low ability minority workers will acquire Bachelor's degree. O Low ability minority worker will acquire Bachelor's degree, while high ability minority workers will not acquire Bachelor's degree