Many police officer positions require the applicant to have a college degree, even though the tasks of a police officer rarely call upon college course material. Suppose two individuals who do not have college degrees are considering applying to the police force. Jacques is considering applying for an officer position and plans on working for the police force for a period of time, over which he would earn approximately $4,000 (in present discounted value) in earnings while in the position. Eleanor is also considering applying, and plans on working as an officer for a period of time, over which she would earn approximately $1,100,000 (in present discounted value) in lifetime earnings while in the position. Also suppose that present value of obtaining a college degree, which is required to submit a job application to the police department, is $100,000. Use the following table to indicate whether each individual would likely apply, or not, given the cost of obtaining a college degree. Buyer Would Apply Would Not Apply Eleanor Jacques

Many police officer positions require the applicant to have a college degree, even though the tasks of a police officer rarely call upon college course material. Suppose two individuals who do not have college degrees are considering applying to the police force. Jacques is considering applying for an officer position and plans on working for the police force for a period of time, over which he would earn approximately $4,000 (in present discounted value) in earnings while in the position. Eleanor is also considering applying, and plans on working as an officer for a period of time, over which she would earn approximately $1,100,000 (in present discounted value) in lifetime earnings while in the position. Also suppose that present value of obtaining a college degree, which is required to submit a job application to the police department, is $100,000. Use the following table to indicate whether each individual would likely apply, or not, given the cost of obtaining a college degree. Buyer Would Apply Would Not Apply Eleanor Jacques

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 9P

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1. It is estimated that over 100,000 students will apply to the top 30 MBA programs in the United States this year. a. Using the concept of net present value and opportunity cost, explain when it is rational for an individual to pursue an MBA degree. b. What would you expect to happen to the number of applicants if the starting salaries of managers with MBA degrees remained constant but salaries of managers without such degrees decreased by 20 percent? Why?
Ma3. The payoff matrix below shows the payoffs for Stefan and Imani in a two strategy game. In the mixed strategy equilibrium, Stefan will play strategy Up with a probability of 1/5 and strategy Down with a probability of 4/5, and Imani will play strategy Left with a probability of 2/5 and strategy Right with a probability of 3/5. What is Stefan's expected payoff in the mixed strategy equilibrium? 10.6 5 4.56 10.4
8. Suppose that a sales force has found 20 qualified buyers and has begun the sales process. The sales manager estimates that 10% eventually proceeds to make a purchase. Assume that a professional company offers three services, priced at $2,000, $7,000 and $20,000, respectively. Based on past results or the sales manager’s estimates, you project that 60% of first-time buyers will choose the cheapest option, 30% will choose the middle option and 10% will choose the most expensive option. a. Calculate the size of a likely sale for any prospect that makes a purchase. b. How many qualified buyers must be found in order for the company to generate $80,000 in sales in a given period? Your final answer must be rounded to the nearest whole number.
(6) What does efficiency-wage theory suggest as an alternative to this decision of wage and/or headcount reduction?
There are 50 workers in the economy in which all workers must choose to work a safe or a risky job. When it comes to accepting a risky job, Worker 1’s reservation price is $5; worker 2’s reservation price is $6, worker 3's reservation wage is $7, and so on. Assume there are exactly 12 risky jobs. (a) What is the equilibrium wage differential between safe and risky jobs? Which workers will be employed at the risky firm? (b) Suppose now that an advertising campaign, paid for by the employers who offer risky jobs, stresses the excitement associated with “the thrill of injury,” and this campaign changes the attitudes of the work force toward being employed in a risky job. Worker 1 now has a reservation price of $1, worker 2’s reservation price is $2, and so on. There are still only 12 risky jobs. What is the new equilibrium wage differential? c) What is the maximum the firm should be willing to pay for its ad campaign?
1-Let’s re-apply Figure 5.3 to illustrate the market for risky jobs. An innovation reduces the cost of making a job safe. What happens to reservation wages on each side of the market? Does the innovation increase or decrease the demand for labor on risky jobs? Does the innovation raise or lower the wage premium associated with risky work?
Derive the utility function of a worker who is aiming to maximize his utility in the market for risky jobs. Explain and illustrate graphically how this worker will be making his choice among different alternatives of risk/wage combinations.
, and you are considering a self-employment opportunity that may pay $10,000 per year or $40,000 per year with equal probabilities. What certain income would provide the same satisfaction as the expected utility from the self-employed position? a) $22,500 b) $15,000 c) $27,500 d) $25,00
12. To prevent adverse selection, health and life insurance companies Question 12 options: a) charge the same premiums to all policyholders. b) require potential policyholders to submit medical records or submit to an examination, and may refuse to sell policies to people with certain pre-existing health conditions. c) charge lower premiums to policyholders with a higher risk of filing claims. d) always charge the same premiums to people regardless of certain pre-existing conditions.
7 A principal-agent problem can arise when a) an agent hires a principal to do something on their behalf, and the agent can observe the principal's actions. b) a principal hires an agent to do something on their behalf, but the principal cannot perfectly observe the agent's actions. c) a principal uses an agent to accomplish a task the principal wants credit for completing. d) an insurance agent sells a policy to a buyer who uses it as an incentive to behave badly
If a company has discriminated against minorities in the past, should it be required to give priority to minority applicants today? Why or why not?
Many police officer positions require the applicant to have a college degree, even though the tasks of a police officer rarely call upon college course material. Suppose two individuals who do not have college degrees are considering applying to the police force. Ginny is considering applying for an officer position and plans on working for the police force for a period of time, over which she would earn approximately $500,000 (in present discounted value) in earnings while in the position. Kenji is also considering applying, and plans on working as an officer for a period of time, over which he would earn approximately $10,000 (in present discounted value) in lifetime earnings while in the position. Also suppose that present value of obtaining a college degree, which is required to submit a job application to the police department, is $100,000. Use the following table to indicate whether each individual would likely apply, or not, given the cost of obtaining a college degree.…