4. An economy has two types of workers, Qualified and Unqualified. Employers in engineering are willing to
Question:
4. An economy has two types of workers, Qualified and Unqualified. Employers in engineering are willing to pay $140,000 to the qualified workers and $50,000 to the unqualified workers. Other employment opportunities yield qualified workers $90,000 and unqualified workers $30,000. Suppose the types differ in their tolerance for taking a tough course in college. Each type must sacrifice time for a tougher course, but the sacrifice is smaller for the qualified type than it is for the unqualified type. Suppose the monetary equivalent of the cost per class is $4,000 for the qualified and $8,000 for the unqualified. The hiring policy suggests that anyone who has taken a certain number of the tough courses (n or more) will be regarded as a qualified worker and paid $140,000; and anyone who has taken fewer than n will be regarded as an unqualified worker and paid $50,000. What is the range of values of n for which a qualified worker will have taken to signal his type while an unqualified one will have chosen n = 0?
This is all I was given
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim