Question
There are 25% low skilled workers and 75% high skilled workers in the labor market. The productivity of low skilled workers is 100, and the
There are 25% low skilled workers and 75% high skilled workers in the labor market. The productivity of low skilled workers is 100, and the productivity of high skilled workers is 200. The cost of education for low skilled workers is $20 per year, and the cost of education for high skilled workers is $10 per year. (1) (5 points) If a firm offers a wage of $100 to workers with less than 6 years of education and $200 to workers with 6 and more years of education, what is the educational decision for each group of workers? What is the average wage that the firm pays? (2) (5 points) If a firm offers a wage of $100 to workers with less than 3 years of education and $175 to workers with 3 and more years of education, what is the educational decision for each group of workers? What is the average wage that the firm pays? (3) (5 points) If a firm offers a wage of $175 to workers with less than 9 years of education and $250 to workers with 9 and more years of education, what is the educational decision for each group of workers? What is the average wage that the firm pays?
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