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A firm need to hire some new employees to staff a startup venture. The firm know that potential employees are distributed throughout the population as

A firm need to hire some new employees to staff a startup venture. The firm know that potential employees are distributed throughout the population as follows, but can't distinguish among them:

Employee Value Probability

$35,000 0.125

$54,000 0.125

$73,000 0.125

$92,000 0.125

$111,000 0.125

$130,000 0.125

$149,000 0.125

$168,000 0.125

The expected value of hiring one employee is $?

Suppose the firm set the salary of the position equal to the expected value of an employee. Assume that employees will not work for a salary below their employee value.

The expected value of an employee who would apply for the position, at this salary, is $?

Given this adverse selection, your most reasonable salary offer (that ensures you do not lose money) is

A. $73,000

B. $35,000

C. $92,000

D. $54,000

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