You Are the Manager of a Firm That Sells Output

question 150

Essay

You are the manager of a firm that sells output at a price of $40 per unit.You are interested in hiring a new worker who will increase your firm's output by 2,000 units per year.Several other firms also are interested in hiring this worker.
a.What is the most you should be willing to pay this worker to come to your firm?
b.What will determine whether or not you actually have to offer this much to the worker to induce him to join your firm?

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Definitions:

Cash Cycle

A business concept that describes the process of converting resources into cash flows, from purchasing inventory to collecting revenue from customers.

Inventory Period

The average time it takes for a company to turn its inventory into sales, indicating the efficiency of inventory management.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories.