Question

Group A of students has a cost function of obtaining y years of education given by C(y)=6000y.Group B has a cost function of C= $10,000.A firm requires y years of education to be hired for a position paying $130,000,workers who do not meet the minimum education requirement are paid $50,000

What range of y values will successfully cause group A students and only Group A students to be hired into the high paying positions

Answer 1

Group A of students has a cost function C_A(y) = 6000y and Group b has cost function of C_B(y) = 10000y for same years of eduaction.

The firm is acquiring workers and paying $130,000 for y* years of eduaction and who don't meet the minimum eduaction requirement are paid with $50,000.

Now one can see that cost of group A is always less than for any year of education as 6000 is less than 10000 and year of education will be always a positive integer. We need to find out that total cost at which only group A will be hired and groub B will be excluded or out of the race. in order to have taht, we need to find the range in between cost of education for group B exceeds the paying package from the firm.

Now, by hit and trial method , for y = 13, group B will have cost equal to package.

and For y = 21.67, group A will have cost equal to package.

this is our range for group A to be hired for only high paying job. By cost benefit analysis , value for years of minimum education should be lie between 13 to 21.66.