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Question 2 (15 marks) There are two types of workers in the market. Each high-type worker has a constant marginal product of $40 and each
Question 2 (15 marks) There are two types of workers in the market. Each high-type worker has a constant marginal product of $40 and each low-type worker has a constant marginal product of $24. The output market and the labor market are both perfectly competitive. All workers are risk neutral. It is common knowledge that 30% of the workers are high-type and 70% of the workers are low-type. A firm cannot tell the difference between the two types of workers. a) (5 marks) What is the wage of each high-type worker? What is the wage of each low-type worker? b) (5 marks) Suppose the workers can attend a course called \"Everyday Physics\" offered by Sheldon. The course has no effect on the marginal product of each worker. The utility loss of attending the course is equivalent to a $8 wage cut for the high-type workers and a $18 wage cut for the low-type workers. Is there a separating equilibrium with high-type workers taking the course and low-type workers not taking it? Brie fly explain. c) (5 marks) Suppose Raj replaces Sheldon as the lecturer for the course. The course still has no effect on the marginal product of each worker. But because Raj is friendlier, the utility loss of attending his course is equivalent to a $5 wage cut for the high-type workers and a $13 wage cut for the low-type workers. Is there a separating equilibrium with high-type workers taking the course and low-type workers not taking it? Briey explain
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