Suppose there are two types of people, high ability and low ability. A high-ability person's productivity is valued at w H = $100,000, while a low-ability person's productivity is valued at w L =...

Suppose there are two types of people, high ability and low ability. A high-ability person's productivity is valued at w_H
= $100,000, while a low-ability person's productivity is valued at w_L
= $50,000. Assume that the employer does not know the ability of a job applicant, but knows that the probability of an applicant being high ability is 50%. Assume next that only high ability applicants can send a signal, i.e., obtain a degree. The employer pays the expected wage. i. What is the wage oer in a pooling equilibrium (no applicant attains a degree)? ii. What is the wage oer in a separating equilibrium (only high-ability applicants attain a degree)? iii. Suppose now both types can attain a degree, but it is costlier to attain for low-ability people and costs them c_L
= $60,000, while it costs high-ability people c_H
= $40,000. Is a separating equilibrium where only high-ability people send education as a signal possible? Explain.