Figure 21.2 shows the benefit functions for low-ability workers and high-ability workers (A and B), along with one indifference curve for each worker type (C and D). The employer cannot observe worker type directly but has created two positions, E and F, as a screening mechanism. Which of the following is true?
A. High- and low-ability workers will choose position E.
B. High-ability workers will choose position E and low ability workers will choose position F.
C. High- and low-ability workers will choose position F.
D. High-ability workers will choose position F and low ability workers will choose position E.
B. High-ability workers will choose position E and low ability workers will choose position F.
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