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Signaling Suppose that both employees and employers view GPA as a signal of quality.  Suppose that with no effort, each earns a 2.7 GPA.  The opportunity cost for a high-skilled worker to improve his/her GPA is $6,000 per 0.1 points.  For a low-skilled worker, the opportunity cost to improve his/her GPA is $16,000 per 0.1 points.  Suppose that high skilled workers will have lifetime earnings of $100,000 more than low-skilled workers.  Is a separating equilibrium possible?  Show your work

 

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