We have a market in which workers choose between working as an academic or as an...
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We have a market in which workers choose between working as an academic or as an entrepreneur. A worker's productivity as an academic (the revenue generated for the college), O, is private information. Colleges view workers' productivity as academics as a random variable that is uniformly distributed on the interval [0, 1]. Good academics are bad entrepreneurs and vice versa. Specifically, a worker with productivity as an academic & would earn f(8) an entrepreneur, where f(8) = 1-8. Colleges pay academics a wage Wand the market is competitive. Universities and workers are risk- neutral expected utility maximisers. Give an explanation and derive the competitive equilibrium of this market. Discuss the equilibrium's properties and what policy intervention, if any, might be appropriate. We have a market in which workers choose between working as an academic or as an entrepreneur. A worker's productivity as an academic (the revenue generated for the college), O, is private information. Colleges view workers' productivity as academics as a random variable that is uniformly distributed on the interval [0, 1]. Good academics are bad entrepreneurs and vice versa. Specifically, a worker with productivity as an academic & would earn f(8) an entrepreneur, where f(8) = 1-8. Colleges pay academics a wage Wand the market is competitive. Universities and workers are risk- neutral expected utility maximisers. Give an explanation and derive the competitive equilibrium of this market. Discuss the equilibrium's properties and what policy intervention, if any, might be appropriate.
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In the competitive equilibrium the wage that workers earn as academics is eq... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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