Question: Please explain how to solve this problem Thank you A rm is looking to hire a worker with complete college education. There are two types

 Please explain how to solve this problem Thank you A rm

Please explain how to solve this problem Thank you

is looking to hire a worker with complete college education. There are

A rm is looking to hire a worker with complete college education. There are two types of such workers: high-productivity, with marginal productivity of 10, and low-productivity, with marginal productivity of zero. Out of all students completing cellege1 a fraction 13;. has high productivity, and the rest (p1 = 1 - pk) have low productivity. The rm is risk-neutral. That is, it only cares about expected prots associated from hiring a worker: the difference between the expected productivity and the wage. 1. If the rm can observe the true type of a worker, how much will it is willing to pay to hire workers of each type (that is, what is the highest wage such that prots are not negative)? 2. Now asSume that the rm cannot observe the worker's type. What is the probability that a random job applicant will be a low-productivity worker? Assuming the rm is risk-neutral, what is the highest wage it would be willing to pay for college-educated workers

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