Suppose that the salary range for recent college graduates with a bachelor's degree in economics is $30,000 to $50,000, with 25 percent of jobs offering $30,000 per year, 50 percent offering $40,000 per year and 25 percent offering $50,000 per year and that in all other respects, the jobs are equally satisfying. Assume that in this market, a job offer remains open for only a short time so that continuing to search requires an applicant to reject any current job offer. The expected starting salary for a college graduate with a bachelor's degree in economics is:
A)$30,000.
B)$40,000.
C)$45,000.
D)$50,000.

Question

Quizplus · Accepted Answer

The expected starting salary is $40,000 = (0.25)($30,000)+ (0.50)($40,000)+ (0.25)($50,000).

Suppose That the Salary Range for Recent College Graduates with a Bachelor's