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BK Books is an online book retailer that also has 10,000 bricks and mortar outlets worldwide. You are a risk-neutral manager within the Corporate Financial Division and are in dire need of a new financial analyst. You only interview students from the top MBA program in your area. Thanks to your screening mechanisms and contacts, the students you interview ultimately differ only with respect to the wage they are willing to accept. About 5 percent of acceptable candidates are wiling to accept a salary of $60,000, while 95 percent demand a salary of $110,000. There are two phases to the interview process that every interviewee must go through. Phase 1 is the initial one-hour on campus interview. All candidates interviewed in Phase 1 are also invited Phase 2 of the interview, which consist of a five-hour office visit. In all, you spend six hours interviewing each candidate and value this time at $750. In addition, it cost a total of $4,250 in travel expenses to interview each candidate. You are very impressed with the first interviewee completing both phases of BK Books interviewing process, and she has indicated that her reservation salary is $110,000. Should you make her an offer at the salary or continue the interviewing process?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M966353

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