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 they differ with respect to the wage at which they are willing to work for your company.The market for sales managers is composed of two types of individuals: 35 percent are willing to work for $50,000 and 65 percent are willing to work for $75,000.The first interviewee is only willing to work for $75,000.The expected benefit from an additional search is:

Question

Quizplus · Accepted Answer

The expected benefit from an additional search is calculated by considering the probability of finding a candidate willing to work for $50,000 and the savings from hiring them. The probability is 35%, and the savings is $25,000 ($75,000 - $50,000). Thus, the expected benefit is 0.35 * $25,000 = $8,750.

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