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Signaling:Two jobs are available at a sandwich restaurant: one cleaning equipment and another slicing tomatoes. Slicing tomatoes are more important to the business so it will give $30,000 in pay over one’s career while cleaning equipment pays $10,000.You can’t train someone to be a good (G) tomato slicer, and whether or not someone is a bad tomato slicer (B) is innate and unobservable. The manager of the sandwich restaurant decides to require Y hours of training for the Tomato Slicer position, but not the equipment cleaner. Bad tomato slicers struggle with cutting tomatoes and risk losing a finger or cutting themselves. As a result, they incur a disutility of cutting tomatoes in the amount of $500 per hour of training, while Good tomato slicers only incur a disutility in the amount of $100 per hour (note there is no disutility for actually doing the job, just during training).

1) Why would the manager train for something that cannot be taught?

2) What is the minimum amount of training the manager should require? Then Graphically depict the situation above that indicates the training requirement you have specified in the prior question, the wages of the two positions, and the training costs of the two types of workers.


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