c) The JKL company is seeking to hire few marketing executives. The manager of the Human...

 

Transcribed Image Text:

c) The JKL company is seeking to hire few marketing executives. The manager of the Human Resource Department is having a hard time to select the best candidates as the actual potentials of the candidates cannot be fully identified during the interview. He however certain that the pool of candidates can be divided into two groups (A and B) in which A are those candidates with high productivity and B are candidates with low productivity. Each of the marketing executive from group A have the capabilities to increase the sales amounted to RM27,500 yearly to the company's revenue while those from group B will only add RM15,000 yearly to the company's revenue. The JKL company will offer 8 years contract of service to those being hired. The difference in the productivity of the candidates can be assessed through the cost of obtaining educational level, y. The cost of obtaining educational level, y for group A and B is given as CA = 12500y and CB-25000y respective. Obviously, the cost of obtaining education is more costly for those from the low productivity group. i. Identify the salary received by the marketing executives from each group (A and B) if the labor market is perfectly competitive and there is free flow of information (knowing for certain which employees coming from which group)? [1.5 marks] ii. Identify the salary received by the marketing executives from each group (A and B) if the company cannot differentiate the employees coming from which group? [1.5 marks] iii. If the company is going to use the educational level, y as the signal to differentiate the employees coming from group A and B, what is the educational level, y that should be chosen by the company as to ensure that there will be a separating equilibrium that will differentiate the low and high productivity group of employees? [3 marks] c) The JKL company is seeking to hire few marketing executives. The manager of the Human Resource Department is having a hard time to select the best candidates as the actual potentials of the candidates cannot be fully identified during the interview. He however certain that the pool of candidates can be divided into two groups (A and B) in which A are those candidates with high productivity and B are candidates with low productivity. Each of the marketing executive from group A have the capabilities to increase the sales amounted to RM27,500 yearly to the company's revenue while those from group B will only add RM15,000 yearly to the company's revenue. The JKL company will offer 8 years contract of service to those being hired. The difference in the productivity of the candidates can be assessed through the cost of obtaining educational level, y. The cost of obtaining educational level, y for group A and B is given as CA = 12500y and CB-25000y respective. Obviously, the cost of obtaining education is more costly for those from the low productivity group. i. Identify the salary received by the marketing executives from each group (A and B) if the labor market is perfectly competitive and there is free flow of information (knowing for certain which employees coming from which group)? [1.5 marks] ii. Identify the salary received by the marketing executives from each group (A and B) if the company cannot differentiate the employees coming from which group? [1.5 marks] iii. If the company is going to use the educational level, y as the signal to differentiate the employees coming from group A and B, what is the educational level, y that should be chosen by the company as to ensure that there will be a separating equilibrium that will differentiate the low and high productivity group of employees? [3 marks]

Answer rating: 100% (QA)

Introduction On the basis of the different persoectives ... View the full answer