What is the equilibrium of this scheme

Assignment Help Econometrics

Reference no: EM131209568

A firm hires two kinds of workers, alphas and betas. One can't tell a beta from an alpha by looking at her, but an alpha will produce $3,000 worth of output per month and a beta will produce $2,500 worth of output in a month. The firm decides to distinguish alphas from betas by making them pass an examination. For each question that they get right on the exam, alphas have to spend half an hour studying and betas have to spend one hour. A worker will be paid $3,000 if she gets at least 40 answers right and $2,500 otherwise. For either type, an hour of studying is as bad as giving up $20 income. What is the equilibrium of this scheme?

Reference no: EM131209568

Questions Cloud

Pushing its current ratio : Hindelang Corporation has $1,240,324 in current assets and $538,549 in current liabilities. Its initial inventory level is $375,000, and it will raise funds through additional notes payable and use them to increase inventory. How much can Hindelan..

Provides a discussion of warehouse health and safety risks : Provides a detailed discussion of warehouse health and safety risks. These include risks associated with layout, floors, heating, noise, housekeeping and fire.

Discuss ways in which given risks can be reduced : Discuss ways in which each of the following risks can be reduced: default risk, interest rate risk, liquidity risk, and exchange rate risk.

What is its times-interest-earned : Thomson Trucking has $13 billion in assets, and its tax ratio is 40%. Its basic earning power (BEP) ratio is 10%, and its return on assets (ROA) is 3%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

What is the equilibrium of this scheme : A worker will be paid $3,000 if she gets at least 40 answers right and $2,500 otherwise. For either type, an hour of studying is as bad as giving up $20 income. What is the equilibrium of this scheme?

Calculate the stripper well selling price : The effective ordinary income tax rate isassumed to be 40%. Calculate the stripper well selling price thatwill make the economics of selling at year 0 a break-even withabandonment at year 0.

Explain your rationale for choosing your five tactics : Explain your rationale for choosing your five tactics for your IMC campaign. Be sure to incorporate concepts from the course to support your rationale! Your rationale should align with the marketing strategy you have already chosen.

What is company dividend yield : The Phillips Company paid total cash dividends of $166,600 on 34,000 outstanding common shares. On the most recent trading day, the common shares sold at $89. What is this company's dividend yield?

What is the proportion d of defective new cars : New cars sell for $14,000 each, and used ones for $2,000. If cars do not depreciate physically with use, what is the proportion d of defective new cars?

User Account

All Pages