Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Signaling: Suppose restaurant XYZ has two positions available, washing dishes and chopping onions.Chopping Onions is relatively more important to the restaurant so it will pay

Signaling:Suppose restaurant XYZ has two positions available, washing dishes and chopping onions.Chopping Onions is relatively more important to the restaurant so it will pay $30,000 over one's career while washing dishes pays $10,000 over one's career.The problem is you cannot train someone to be a good (G) onion chopper.In addition, whether or not someone is a bad onion chopper (B) is innate and unobservable.Even though the skill is something you are born with, the manager of XYZ decides to require Y hours of training for the Onion Chopper position, but not the dish washer.Bad Onion Choppers struggle with chopping onions and risk losing a finger and tearing up easily.As a result, they incur a disutility of chopping onions in the amount of $500 per hour of training, while Good Onion Choppers only incur a disutility in the amount of $100 per hour (note there is no disutility for actually doing the job, just during training).

What is the minimum amount of training the manager should require?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial economics applications strategy and tactics

Authors: James r. mcguigan, R. Charles Moyer, frederick h. deb harris

12th Edition

9781133008071, 1439079234, 1133008070, 978-1439079232

More Books

Students also viewed these Economics questions

Question

Who provides needed office supplies?

Answered: 1 week ago

Question

=+ a. The capitaloutput ratio is constant.

Answered: 1 week ago