25 pts Question 39 Informational asymmetry is a difference i

2.5 pts Question 39 Informational asymmetry is a difference in efficiency equality relevant knowledge. O signaling. DI Question 40 2.5 pts A college professor hires a student to babysit her children and pays the student an efficiency-wage. Which of the following is correct about the wage the student earns? ?The wage is higher than the wage the student could earn working a similar job elsewhere. The wage is the same as the wage the student could earn working a similar job elsewhere. O The wage is lower than the wage the student could earn working a similar job elsewhere. The wage is likely to result in the student shirking responsibilities.

Solution

39.

In case of asymmetry information can be defined as a situation in which one party has more information than the other party.

Hence it can be said that the asymmetry information is a difference in the relevant knowledge.

Hence option third is the correct answer.

40.

An efficiency wage can be defined as a wage which is paid above the equilibrium wage.

Since the college professor pay the student for the service of babysit an efficiency wage. It means this wage is greater than the equilibrium wage and it is paid for increasing quantity as well as quality.

Hence it can be said that student wage is higher than the wage which he could earn working a similar job elsewhere.

Hence option first is the correct answer.