A risk-neutral manager is attempting to hire a worker. All workers in the market are of identical quality but differ with respect to the wage at which they are willing to work. Suppose half of the workers in the labor market are willing to work for a salary of $40,000 and half will accept a salary of $38,000. The manager spends three hours interviewing a given worker and values this time at $300. The first worker the manager interviews says he will work only if paid $40,000. Should the firm manager make him an offer or interview another worker?
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A risk-neutral manager is attempting to hire a worker. All workers in the market are of identical quality but differ with respect to the wage at which they are willing to work. Suppose half of the workers in the labor market are willing to work for a salary of $40,000 and half will accept a salary of $38,000. The manager spends three hours interviewing a given worker and values this time at $300. The first worker the manager interviews says he will work only if paid $40,000. Should the firm manager make him an offer or interview another worker?
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- Suppose there are two types of workers. Type 1 workers have a marginal product of labor (MPL) = 1. That is, if a firm hires an extra Type I worker, that worker will produce 1 extra unit of output. Type II workers have a MPL = 2. The firm can sell each extra unit of output for P = $12,000. Firms are unable to identify whether or not a worker is Type I or Type Il unless the worker sends a signal of what type they are. The signal that workers can send is a level of education, e. The firm adopts the following hiring strategy: If e >e* then offer the worker a wage rate equal to $24,000. If e < e* then offer the worker a wage rate equal to $12,000. The cost to Type I workers of getting education level e is $4000*e. The cost to Type II workers of getting education level e is $2000*e. If the firm sets e* = 8, which of the following statements is true? O Type I workers will not get e*, but Type II workers will get e*, which means there is a separating equilibrium. O Neither type of workers will…Suppose you manage a factory with ten workers. Each worker’s output is determined by the equation q = e. Output sells in the market for a price of 40. The firm has fixed cost equal to 800, and variable costs aside from labor are 8 per unit of output. Worker utility is U = w – e2. Suppose you are paying workers a wage equal to bq. What is the profit- maximizing value of b? Suppose that the probability of worker error increases as the worker increases effort, and that worker error results in unusable output. Suppose that the probability of worker error is Pr[Error] = e/10. Then for worker effort level e, expected (usable) output is now determined by the equation E[q] = (1-Pr[Error]) x e. However, the problem is that you cannot detect errors until after the product is shipped to customers, meaning you pay workers for output before you know whether it is usable or not, and you have to refund your customers for unusable output. Demonstrate why you should not pay your workers the same…Jim Range is the manager at a USPS office which requires arduous physical labor of their employees. Jim wants to hire an employee. During the interview, Sofia Caster tells Jim that she is a hard worker. But Sofia Caster realizes once she is hired that the federal government and its agencies cannot fire their employees unless their performance is extremely poor. She thus decides to work minimally as a result of this information. The problem was created because of? Misaligned incentives. Moral hazard. A OB c Asymmetric information. OD. The principle agent problem.
- Managerial Economics Suppose that a sales force has found 20 qualified buyers and has begun the sales process. The sales manager estimates that 10% eventually proceeds to make a purchase. Assume that a professional company offers three services, priced at $2,000, $7,000 and $20,000, respectively. Based on past results or the sales manager’s estimates, you project that 60% of first-time buyers will choose the cheapest option, 30% will choose the middle option and 10% will choose the most expensive option. a. Calculate the size of a likely sale for any prospect that makes a purchase.Managerial Economics Suppose that a sales force has found 20 qualified buyers and has begun the sales process. The sales manager estimates that 10% eventually proceeds to make a purchase. Assume that a professional company offers three services, priced at $2,000, $7,000 and $20,000, respectively. Based on past results or the sales manager’s estimates, you project that 60% of first-time buyers will choose the cheapest option, 30% will choose the middle option and 10% will choose the most expensive option. a. How many qualified buyers must be found in order for the company to generate $80,000 in sales in a given period? Your final answer must be rounded to the nearest whole number.A young person entering the job market may be talented or untalented.Suppose that one-quarter of high school graduates are talented, and the rest untalented. A recent high school graduate, who knows whether or not he is talented, has the option of spending a year traveling overseas or enrolling at college (we will assume that he or she cannot do both) before applying for a job. An employer seeking to fill a job opening cannot know whether or not a job applicant is talented; all he knows is that the applicant either went to college or traveled overseas. The payoff an employer gets from hiring a worker depends solely on the talents of the hired worker (and not on his educational level), while the payoff to the youth depends on what he chose to do after high school, on his talents (because talented students enjoy their studies at college more than untalented students), and on whether or not he gets a job. These payoffs are described in the following tables (where the employer is the row…
- The small family company that you manage has invested $35,000 in developing a new product, but the development is not quite finished. At a recent meeting, your family company management team predicts that the introduction of competing products has reduced the expected sales of your new product to $30,000. If your company receives zero profit for an unfinished product, and if it would cost $10,000 to finish development and make the product, you go ahead and do so. The most your family company should spend to complete development is O should; $30,000 O should; $20,000 O should; $10,000 O should not; $0A claims representative suspects that an insured has committed fraud in submitting a claim for stolen property by including items that were not stolen. The claims representative believes that the insurer can deny the claim because of the fraud but does not have sufficient evidence to meet the legal standards to prove fraud. The claims representative considers offering less that a fair amount to settle the claim in hopes that the insured will accept the settlement. This course of action would reduce the insurer’s loss from a fraudulent claim, close the claim, and avoid costs associated with trying to prove fraud. However, despite the claims representative’s suspicions, the insured not may not be guilty of fraud and may be entitled to the full amount of the claim. There are several factors to consider with his scenario. Considering the two primary goals of the claims function, which are keeping the insurer’s promise and supporting the insurer’s profit goal, how would they apply…A company decides whether and how to induce a manager to put in high effort to increase the changes that the project succeeds. Unfortunately, the manager's effort is unobservable. the value of a successful project is $2 million; the probability of success given high effort is 0.4; the probability of success given low effort is 0.2 The manager's utility is the square root of compensation (measured in millions of dollars) and his disutility from exerting high effort is 0.1. The reservation wage of the manager is $160000. To induce HIGH effort, the company should pay the manager $______ in case of a successful project and $______ in case of an unsuccessful project.
- COVID-19 has caused several shortages: paper products, hand sanitizer, and even nurses. When a hospital needs nurses, they might call Fastaff, which has been sending its nurses all around the country. Once a nurse gets an assignment, they pack their bags and need to be there within a week. During a pandemic, these assignments come with some risk, but these nurses are well compensated for their time. “They really run into the fire,” explained Fastaff Senior VP of Marketing Lauren Pasquale-Bartlett. “They’re very brave, they’re like the special forces of nursing. They go in for these really critical assignments.” The need for traveling nurses across the country has increased drastically because of the coronavirus pandemic. One of the state’s needing nurses is Ohio, according to Pasquale-Bartlett. “Particularly in the last few weeks we’ve seen a two to three increase in demand in requests for nurses to come in and support the staff,” she said. “That really indicates to us that it’s an…COVID-19 has caused several shortages: paper products, hand sanitizer, and even nurses. When a hospital needs nurses, they might call Fastaff, which has been sending its nurses all around the country. Once a nurse gets an assignment, they pack their bags and need to be there within a week. During a pandemic, these assignments come with some risk, but these nurses are well compensated for their time. “They really run into the fire,” explained Fastaff Senior VP of Marketing Lauren Pasquale-Bartlett. “They’re very brave, they’re like the special forces of nursing. They go in for these really critical assignments.” The need for traveling nurses across the country has increased drastically because of the coronavirus pandemic. One of the state’s needing nurses is Ohio, according to Pasquale-Bartlett. “Particularly in the last few weeks we’ve seen a two to three increase in demand in requests for nurses to come in and support the staff,” she said. “That really indicates to us that it’s an…COVID-19 has caused several shortages: paper products, hand sanitizer, and even nurses. When a hospital needs nurses, they might call Fastaff, which has been sending its nurses all around the country. Once a nurse gets an assignment, they pack their bags and need to be there within a week. During a pandemic, these assignments come with some risk, but these nurses are well compensated for their time. “They really run into the fire,” explained Fastaff Senior VP of Marketing Lauren Pasquale-Bartlett. “They’re very brave, they’re like the special forces of nursing. They go in for these really critical assignments.” The need for traveling nurses across the country has increased drastically because of the coronavirus pandemic. One of the state’s needing nurses is Ohio, according to Pasquale-Bartlett. “Particularly in the last few weeks we’ve seen a two to three increase in demand in requests for nurses to come in and support the staff,” she said. “That really indicates to us that it’s an…