Scenario 17.2
Consider the information below:
For Group K the cost of attaining an educational level y is
C_K(y) = $2,000y
and for Group M the cost of attaining that level is
C_M(y) = $4,000y.
Employees will be offered $30,000 if they have where y* is an education threshold determined by the employer. They will be offered $90,000 if they have
-Refer to Scenario 17.2. The highest level of y^* that can be set and still have the high-productivity people choose to meet it is:

Question

Scenario 17.2
Consider the information below:
For Group K the cost of attaining an educational level y is
C_K(y) = $2,000y
and for Group M the cost of attaining that level is
C_M(y) = $4,000y.
Employees will be offered $30,000 if they have

Scenario 17.2 Consider the information below: For Group K the cost of attaining an educational level y is C<sub>K</sub>(y) = $2,000y and for Group M the cost of attaining that level is C<sub>M</sub>(y) = $4,000y. Employees will be offered $30,000 if they have where y* is an education threshold determined by the employer. They will be offered $90,000 if they have -Refer to Scenario 17.2. The highest level of y<sup>*</sup> that can be set and still have the high-productivity people choose to meet it is: A) 90. B) 60. C) 30. D) 22.5. E) 15.

where y* is an education threshold determined by the employer. They will be offered $90,000 if they have

-Refer to Scenario 17.2. The highest level of y^* that can be set and still have the high-productivity people choose to meet it is:

Quizplus · Accepted Answer

If we set y* at $30,000, then employees from Group K would choose to meet the threshold because $2,000 x 30 = $60,000 which is less than $90,000. However, employees from Group M would not choose to meet the threshold because $4,000 x 30 = $120,000 which is more than $90,000. 
Therefore, the highest level of y that can be set and still have the high-productivity people choose to meet it is $30,000.

Scenario 17.2 Consider the Information Below