1.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 Finance Division and are in dire need of a new financial analyst. You only interview students from the top MBA programs in your area. Thanks to your screening mechanisms and contacts, the students you interview ultimately differ only with respect to the wage that they are willing to accept. About 5 percent of acceptable candidates are willing 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 to Phase 2 of the interview, which consists of a five-hour office visit. In all, you spend six hours interviewing each candidate and value this time at $750. In addition, it costs 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's interviewing process, and she has indicated that her reservation salary is $110,000. Should you make her an offer at that salary or continue the interviewing process? Explain.

2.This past year, Used Imported Autos sold very few cars and lost over $500,000. As a consequence, its manager is contemplating two strategies to increase its sales volume. The low-cost strategy involves changing the dealership name to Quality Used Imported Autos to signal to customers that the company sells high-quality cars. The high-cost strategy involves issuing a 10-point auto inspection on all used cars on the lot and offering consumers a 30-day warranty on every used car sold. Which of these two strategies do you think would have the greatest impact on sales volume? Explain.