Suppose there are two types of fruit pickers. Fast pickers bring in more than 10 units of fruit per day, while the slow pickers bring in fewer than 10 units per day. Johnson Farm pays pickers a flat rate of $50 per day, and Henry Farm pays pickers $5 for every unit picked. The pickers know their productivity level, but the farms don't know a picker's productivity until he or she starts working.
a. At which farm will the slow pickers choose to apply?
b. At which farm will the fast pickers choose to apply?
c. Which farm will have adverse selection in the applications?

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The Answer of Suppose there are two types of fruit pickers. Fast pickers bring in more than 10 units of fruit per day, while the slow pickers bring in fewer than 10 units per day. Johnson Farm pays pickers a flat rate of $50 per day, and Henry Farm pays pickers $5 for every unit picked. The pickers know their productivity level, but the farms don't know a picker's productivity until he or she starts working.
a. At which farm will the slow pickers choose to apply?
b. At which farm will the fast pickers choose to apply?
c. Which farm will have adverse selection in the applications?

Suppose There Are Two Types of Fruit Pickers