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. If the threshold educational level y^* is set at 20, A) only individuals in Group K will attain it. B) only individuals in Group M will attain it. C) individuals in both groups will attain it. D) no individuals will attain it. E) some fraction of individuals in each group will attain it.

Question

Quizplus · Accepted Answer

Since the threshold educational level is set at 20 and the cost for attaining an educational level for Group K is only $2,000 per unit, individuals in Group K will be able to attain it. On the other hand, the cost for Group M is $4,000 per unit, which means individuals in Group M will need to spend $80,000 to attain a level of 20, which is more than the offer of $30,000. Therefore, only individuals in Group K will attain the threshold educational level.

Scenario 17.2 Consider the Information Below