LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 10, Problem 8RQ
To determine
Explain the way how the employers choose the optimal length of a strike in a model where there is asymmetric information.
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other best example of contingency planning about turnover of employees
Suppose there are two types of workers. Type 1 workers have a marginal product of labor
(MPL) = 1. That is, if a firm hires an extra Type I worker, that worker will produce 1 extra unit
of output. Type II workers have a MPL = 2. The firm can sell each extra unit of output for P
= $12,000.
Firms are unable to identify whether or not a worker is Type I or Type Il unless the worker
sends a signal of what type they are. The signal that workers can send is a level of
education, e. The firm adopts the following hiring strategy:
If e >e* then offer the worker a wage rate equal to $24,000.
If e < e* then offer the worker a wage rate equal to $12,000.
The cost to Type I workers of getting education level e is $4000*e. The cost to Type II
workers of getting education level e is $2000*e. If the firm sets e* = 8, which of the following
statements is true?
O Type I workers will not get e*, but Type II workers will get e*, which means there is a separating
equilibrium.
O Neither type of workers will…
Classify cach statement as either true or false.
A tournament compensation scheme is subject to ability risk.
Josephina receives the largest bonus because she had the highest sales last month. Jana had the second
highest sales and receives the second largest bonus. This is an example of a tournament compensation scheme.
Professors who grade on a curve are using a tournament compensation scheme.
Answer Bank
truc
false
00
Chapter 10 Solutions
LABOR ECONOMICS
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Major League Baseball players are not eligible for...Ch. 10 - Prob. 15P
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