The value of a worker's marginal product is $50 per hour for high-ability workers and $15 per hour for low-ability workers. The preferences of high-ability workers correspond to the utility function UH(E, W) = W - 4E, and the preferences of low-ability workers correspond to the utility function UL(E, W) = W - 10E. By law, everyone is required to attend at least ten years of school. Three-fifths of the population has low ability, and two-fifths has high ability. What can be said about the educational attainment of each type of worker in a separating equilibrium?
A. EL = 10; 13.5 < EH < 18.75
B. EL = 10; EH = 16.125
C. EL = 10; EH = 10
D. EL = 13.5; EH < 18.75
A. EL = 10; 13.5 < EH < 18.75
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