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Suppose there are two types of persons: high-ability and low-ability. A particular diploma costs a high-ability person R24 000 and costs a low-ability person R30
Suppose there are two types of persons: high-ability and low-ability. A particular diploma costs a high-ability person R24 000 and costs a low-ability person R30 000. Firms wish to use education as a screening device where they intend to pay R50 000 to workers without a diploma and RK to those with a diploma. In what range must K be to make this an effective screening device? Show all your workings
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