Sophia operates her own accounting practice and is looking to hire two entrylevel accountants. A high-productivity worker will generate $90,000 in revenue per year and a low-productivity worker will generate $60,000. Tasha is a highproductivity worker and wants a salary of at least $80,000. Rick is a lowproductivity worker and wants at least a $55,000 salary.

a. If Sophia can identify Tasha’s and Rick’s productivity, who should she hire, and what would her profits be?

b. It’s more likely that Sophia can’t tell who will be a high- or low-productivity worker from an interview. But based on her experience, she believes that 65% of workers are low productivity and 35% of workers are high productivity. Find the maximum salary that she would be willing to pay and determine who will accept her job offer. Does this change the maximum she is willing to pay for an accountant of unknown quality?

c. How do employers try to determine a job candidate’s productivity before hiring them?