A large steel producer has two types of job offers: ED (Engineer Development) and EM (Engineer Mechanical). Both jobs require an Engineer degree. The ED job requires high analytical skills and computer software development to work in the steel plant. The market entry wage is $130,000. The EM job is less demanding and requires no software development knowledge. Market entry wage is $68,000 for an EM. The firm's hiring policy is: Individuals successfully taking and passing w computer courses during college will be regarded as ED and paid $138,000; otherwise, he or she will be regarded as EM type and paid S76,000. ED's opportunity cost to complete a tough course is $3,650, and EM's opportunity cost to complete a tough course is $10,200. Instructions: use no decimal for your answers. The w from the incentive-compatibility condition for ED is: The w from the incentive-compatibility condition for EM is: The w from the participation condition for ED is: The range of w for which a sepration of the type of salesepersons is: C At 2.2 < w < 17, ED submits w. EM will not submit any w. C There is no range of w that separates ED and EM. The screening device w is ineffective at separating the types. C At 6 < w< 17, both ED and EM types submit w. O At 6 < w< 17, ED submits w. EM will not submit any w. What would you recommend to the firm in this case? C The firm can use the market wages and recalculate w. O The firm can increase the EM wage or use a different opportunity cost. C The firm can increase the ED wage or use another opportunity cost for the types. C The firm can increase the ED wage or use another screening device.
A large steel producer has two types of job offers: ED (Engineer Development) and EM (Engineer Mechanical). Both jobs require an Engineer degree. The ED job requires high analytical skills and computer software development to work in the steel plant. The market entry wage is $130,000. The EM job is less demanding and requires no software development knowledge. Market entry wage is $68,000 for an EM. The firm's hiring policy is: Individuals successfully taking and passing w computer courses during college will be regarded as ED and paid $138,000; otherwise, he or she will be regarded as EM type and paid S76,000. ED's opportunity cost to complete a tough course is $3,650, and EM's opportunity cost to complete a tough course is $10,200. Instructions: use no decimal for your answers. The w from the incentive-compatibility condition for ED is: The w from the incentive-compatibility condition for EM is: The w from the participation condition for ED is: The range of w for which a sepration of the type of salesepersons is: C At 2.2 < w < 17, ED submits w. EM will not submit any w. C There is no range of w that separates ED and EM. The screening device w is ineffective at separating the types. C At 6 < w< 17, both ED and EM types submit w. O At 6 < w< 17, ED submits w. EM will not submit any w. What would you recommend to the firm in this case? C The firm can use the market wages and recalculate w. O The firm can increase the EM wage or use a different opportunity cost. C The firm can increase the ED wage or use another opportunity cost for the types. C The firm can increase the ED wage or use another screening device.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A large steel producer has two types of job offers: ED (Engineer Development) and EM (Engineer Mechanical). Both jobs require an Engineer degree. The ED job requires high analytical skills and computer software
development to work in the steel plant. The market entry wage is $130,000. The EM job is less demanding and requires no software development knowledge. Market entry wage is $68,000 for an EM. The firm's hiring
policy is: Individuals successfully taking and passing w computer courses during college will be regarded as ED and paid $138,000; otherwise, he or she will be regarded as EM type and paid S76,000. ED's
opportunity cost to complete a tough course is $3,65o, and EM's opportunity cost to complete a tough course is $10,200.
Instructions: use no decimal for your answers.
The w from the incentive-compatibility condition for ED is:
The w from the incentive-compatibility condition for EM is:
The w from the participation condition for ED is:
The range of w for which a sepration of the type of salesepersons is:
C At 2.2 < w < 17, ED submits w. EM will not submit any w.
C There is no range of w that separates ED and EM. The screening device w is ineffective at separating the types.
C At 6 < w < 17, both ED and EM types submit w.
C At 6 < w< 17, ED submits w. EM will not submit any w.
What would you recommend to the firm in this case?
O The firm can use the market wages and recalculate w.
O The firm can increase the EM wage or use a different opportunity cost.
C The firm can increase the ED wage or use another opportunity cost for the types.
C The firm can increase the ED wage or use another screening device.
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