Q1 StatementAn online clothing sales company is looking to set up a customer service in-housecustomer. Because this is the company's only marketing channel, it takes that those who receivetelephone or chat inquiries recreate the shopping experience in a store physical. This is complexgiven the lack of personal interaction between the customer and the seller. Without However, theowner of the company considered that a competent person who knows how to 'connect' withcustomers, has the potential to generate twice the sales of the average store clerk. TheThe challenge is that this quality is not observable at first glance. Faced with this difficulty, theowner of the company contacted him given his experience in people management. You, showing offwhat you learned in the course, carry out a detailed study of the conditions of the labor market andthe competitive environment of the company. The analysis yields two results main. First, you haveidentified that an average apparel salesperson earns an annual salary of $ 15M., However, not allsalespeople have the skills soft to connect with customers. Those that fail to connect would producea volume of online sales that would leave earnings of $ 10M per year to the company that youadvise. Secondly, a salesperson who does have the ability to create a connection with the customercould generate profits of $ 40M annually for the company that you advise. Second, his detailedanalysis of the psychology of virtual sales allowed him to identify that the ability to connect withthe client is correlated to the degree of histrionics and extroversion of the seller, as well as hiscommunication skills. These characteristics are not manifest with the naked eye, moreover, aworker would have to spend a whole year in the firm so that it is certain whether it possesses themor not. Because of this, he came up with two alternatives to identify to people with these skills. Oneof them is to require a validity personality test international. Histrionic, outgoing people, and withgood communication skillsi This can be interpreted 23 a market wage.They would pass without the need to study. However, this type of test is not infallible since aA person without these skills could study 6 months and still pass it. The other altemative is that,to be considered, the applicant has a qualification Formal in theatrical performance. In Chile,training in acting can be obtained in schools of Acting or in universities. The time it takes toobtain a formal qualification (title) in an Acting school depends on the talent and personality ofthe student. The histrionic people, Extroverts, and with good communication skills generallyobtain the title in 1 year, While those that do not present these characteristics require 3 years onaverage. By On the other hand, theatrical education at the university level takes 3 yearsregardless of talent or the student's personality. It should be noted that in the third year of study,the universities grant a certificate totally equivalent to the one awarded by acting schools.Another difference between acting schools and universities is the employment opportunitiesassociated with you add to each one. An actor or actress with an acting school degree may workin plays small theater, with an average annual salary of $ 18M. An actor or actress with acollege degree, instead, you can work on top-tier plays, with an average salary of $ 50MWith all this information you must detemine if a signaling mechanism is necessary and,If so, which is the most convenient for the signature. To do this, denote as seller type 0 thosewho they do not have the competencies valued by the firm, and type 1 salesperson to those whodo. Remember that these competencies are not observable. Questions1) Suppose that only 25% of potential applicants are type 1. Is it necessary to?Implement a signaling mechanism? Fundamentally numerically.2) Calculate the opportunity cost of each certification alternative (personality, schoolperformance title, and university performance title), for each typeSeller. Hint: remember the concept of opportunity cost. It could be found in theNeed to compare two alternatives for a certificate level and vendor type.3) Write in algebraic terms the incentive compatibility constraints andOf participation. Denote co (y) the cost of a type 0 salesperson and ci (y) the cost of aType 1 vendor, where y represents in generic form the different alternatives – i.e. y =1test, acting school, university. Also, consider that the salary paid by theFirm that you advise your sellers is w. What finally happens to the restrictions ofParticipation and incentive compatibility? Fundamentally.4) Identify the optimal certification that would allow a separate balance to be implementedRador; that is, only type 1 people apply for the position of salesperson in the firm. For this,Suppose the firm is willing to pay $ 35M to a Type 1 candidate if it can identifyCarlo from the mechanism that you propose. Basically with the numerical results ofThe relevant incentive and participation compatibility restrictions.5) What would be the minimum wage that the company could offer a type 1 seller kuch?That the separating equilibrium obtained in the previous question is maintained?6) Suppose that the trade employees union negotiated with the employer a salary$ 25M annual minimum for store clerks. Can you implement a balance separator in this newsituation? Fundamentally with numerical results of the constraintsCompatibility of relevant incentives and participation.

Yes, it is necessary to implement a signaling mechanism in this case. The reason is that the company…

1) Suppose that only 25% of potential applicants are type 1. Is it necessary to? Implement a signaling mechanism? Fundamentally numerically. 2) Calculate the opportunity cost of each certification alternative (personality, school performance title, and university performance title), for each type Seller. Hint: remember the concept of opportunity cost. It could be found in the Need to compare two alternatives for a certificate level and vendor type. 3) Write in algebraic terms the incentive compatibility constraints and Of participation. Denote co (y) the cost of a type 0 salesperson and c: (y) the cost of a Type 1 vendor, where y represents in generic form the different alternatives-ie.y= 1test, acting school, university. Also, consider that the salary paid by the Firm that you advise your sellers is "w. What finally happens to the restrictions of Participation and incentive compatibility? Fundamentally.

1) Suppose that only 25% of potential applicants are type 1. Is it necessary to? Implement a signaling mechanism? Fundamentally numerically. 2) Calculate the opportunity cost of each certification alternative (personality, school performance title, and university performance title), for each type Seller. Hint: remember the concept of opportunity cost. It could be found in the Need to compare two alternatives for a certificate level and vendor type. 3) Write in algebraic terms the incentive compatibility constraints and Of participation. Denote co (y) the cost of a type 0 salesperson and c: (y) the cost of a Type 1 vendor, where y represents in generic form the different alternatives-ie.y= 1test, acting school, university. Also, consider that the salary paid by the Firm that you advise your sellers is "w. What finally happens to the restrictions of Participation and incentive compatibility? Fundamentally.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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