Suppose You Are a Risk-Neutral Manager Attempting to Hire a New

question 110

Multiple Choice

Suppose you are a risk-neutral manager attempting to hire a new sales manager.All of the workers in the market have the same ability to manage and sell, but differ with respect to the wage at which they are willing to work for your company.The market for sales managers is composed of three types of individuals: 35 percent are willing to work for $50,000 and 65 percent are willing to work for $75,000.If the first interviewee is only willing to work for $75,000.The expected benefit from an additional search is

• A)$32,500.
• B)$26,250.
• C)$16,250.
• D)$8,750.

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Definitions:

Unlimited Resources

A theoretical scenario where resources are abundant and not finite, eliminating scarcity and its associated challenges.

Opportunity Cost

The cost of missing out on the next best alternative when making a decision or choosing to carry out one action instead of another.

Accountants

Professionals who perform accounting functions such as audits or financial statement analysis according to prescribed methods.

Wages

Payments made to employees for their labor, typically calculated by hour, day, or piece.