question archive A firm need to hire some new employees to staff a startup venture
A firm need to hire some new employees to staff a startup venture
Subject:EconomicsPrice:3.86 Bought14
A firm need to hire some new employees to staff a startup venture. The firm know that potential employees are distributed throughout the population as follows, but can't distinguish among them:
Employee Value Probability
$35,000 0.125
$54,000 0.125
$73,000 0.125
$92,000 0.125
$111,000 0.125
$130,000 0.125
$149,000 0.125
$168,000 0.125
The expected value of hiring one employee is $?
Suppose the firm set the salary of the position equal to the expected value of an employee. Assume that employees will not work for a salary below their employee value.
The expected value of an employee who would apply for the position, at this salary, is $?
Given this adverse selection, your most reasonable salary offer (that ensures you do not lose money) is
A. $73,000
B. $35,000
C. $92,000
D. $54,000
