Question

An employer faces two types of employees. Regular workers are 70% of the population and generate $100,000 in productivity. Exceptional workers are 30% of the population, and generate $120,000 in productivity. Employees know their types, and reject salaries below their productivity. If the employer offers a salary equal to the average productivity in the population, what will be the employer’s per-employee profit? Select one: a. -$10,000 b. $0 Incorrect c. -$6,000 d. $4,000

Answer 1

The correct answer for the question that is being presented above is this one: "c. -$6,000." Employees know their types, and reject salaries below their productivity. If the employer offers a salary equal to the average productivity in the population, the employer’s per-employee profit will be -$6,000