Learning Goal: I’m working on a micro economics multi-part question and need an explanation and answer to help me learn.Background for Question 15 and 16: Suppose that there are exactly two types of workers in LA: A’s and B’s. A’s earn a firm $15 in revenue (in their lifetime) and B’s earn a firm $10 in revenue (in their lifetime). There are equal numbers of each type of worker in LA. Firms cannot distinguish between the two types of workers. Even after a firm has hired them, the firm won’t be able to monitor their work closely enough to determine which workers are of which type. Workers prefer a higher wage to a lower wage and workers supply their labor (to the highest possible wage they can get) as long as this wage is positive. A firm pays a worker a wage equal to the expected amount of revenue the worker earns for the firm (in his/her lifetime). Workers are risk neutral.Question 15 (2 points): What is the wage (per lifetime) that a type A worker receives? What is the wage (per lifetime) that a type B worker receives?Question 16 (8 points): Now suppose that UCLA offers an microeconomics course. The course is taught poorly, so that students learn nothing that helps them in the workplace (i.e. taking the course does not affect the revenue that a worker earns for a firm). Type A workers are more patient than type B workers, so that sitting through the poorly-taught course is equivalent to losing $6 for type A workers (i.e., if type A workers earn a wage of WA and take the course, their utility is U (WA − 6)) and is equivalent to losing $x > $6 for type B workers (i.e., if type B workers earn a wage of WB and take the course, their utility is U (WB − x)). Firms can observe whether or not a worker took the course. Is there any value of x such that in equilibrium: (i) all type A workers take the class; (ii) no type B worker3takes the class; and (iii) firms pay anyone who took the class $15 and pay anyone who did not take the class $10? If so, what is the lowest value of x for which this is an equilibrium?
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