ECON 3400- Final Exam Guide - Comprehensive Notes for the exam ( 50 pages long!)
28 Mar 2018
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Sometimes pays off to hire a risky worker: Downside: value of the risk can be large can sometimes really mess us. Termination costs can sometimes outweigh the risk. Can take too long to test employee. Value of the risky hire will usually be larger the younger the new hire and the lower the turnover in the company: so they stay at the company longer. **assuming we can make a profit when we find a star employee. **the firm has to match the employee"s outside market value. What hiring standards the firm would like to establish, before it actually begins recruiting employees . Objective is to maximize profits: balancing benefits against costs: From table 1. 1 and 1. 2 on page 10. Monthly profit from high school = 198. Monthly profit from college = 931 **more profitable** To get million in monthly sales, more profitable to hire high school graduates: high school costs / of monthly sales.
