QUESTION 5 There are two types of college graduate) workers in financial industry: A (able) type and C (challenged) type. Potential employers in finance will pay $160,000 a year to a type A and $60,000 to a type C. Unfortunately, employers cannot observe the worker's type while each worker knows his or her own type. However, a market research informs all employers and workers that 60% of the population is type A and 40% is type C. Additionally, it is known to everyone that the worker types differ in their tolerance for taking an analytical course rather than easy ones in college. The A types regard the cost of each analytical course as equivalent to $3,000 a year of salary, while the C types regard it as $15,000 a year of salary. Alternative employment opportunities outside of the financial industry yield the A types a salary of $125,000 and the C types a salary of $30,000. Suppose an employer in this industry use this differential to screen his applicants and tell the A types from the C types. The employer's hiring policy states the following: "Anyone who has taken a certain number, n, or more of the analytical courses will be regarded as an A and paid $160,000, and anyone who has taken fewer than n will be regarded as a C and paid $60,000." The hiring policy should make sure that each type A worker prefers taking n analytic courses (to signal his or her true (A) type) and participating in finance to leaving the financial industry for the alternative employment opportunities. Complete this participation constraint for type A worker: Hint: Omit the thousands separator. na QUESTION 5 There are two types of college graduate) workers in financial industry: A (able) type and C (challenged) type. Potential employers in finance will pay $160,000 a year to a type A and $60,000 to a type C. Unfortunately, employers cannot observe the worker's type while each worker knows his or her own type. However, a market research informs all employers and workers that 60% of the population is type A and 40% is type C. Additionally, it is known to everyone that the worker types differ in their tolerance for taking an analytical course rather than easy ones in college. The A types regard the cost of each analytical course as equivalent to $3,000 a year of salary, while the C types regard it as $15,000 a year of salary. Alternative employment opportunities outside of the financial industry yield the A types a salary of $125,000 and the C types a salary of $30,000. Suppose an employer in this industry use this differential to screen his applicants and tell the A types from the C types. The employer's hiring policy states the following: "Anyone who has taken a certain number, n, or more of the analytical courses will be regarded as an A and paid $160,000, and anyone who has taken fewer than n will be regarded as a C and paid $60,000." The hiring policy should make sure that each type A worker prefers taking n analytic courses (to signal his or her true (A) type) and participating in finance to leaving the financial industry for the alternative employment opportunities. Complete this participation constraint for type A worker: Hint: Omit the thousands separator. na
