TEXAS A&M INTERNATIONAL UNIVERSITY
Course: ECO 5310-680 Managerial Economics – SUMMER 2021
Problem I
Increasingly, nowadays it is frequent to see in many Police Officer positions the requirement of a college degree for all applicants even though the tasks of a police officer rarely call upon college course material. Why don’t police departments increase their applicant pool by dropping this requirement?
Problem II
Online MBA programs significantly reduce the cost to existing managers of obtaining an MBA, as they permit students to maintain their existing residence and employment while working toward an advanced degree in business. Based on your knowledge of the economics of information and student characteristics, compare and contrast the likely characteristics of students enrolled in traditional MBA programs with those enrolled in online MBA programs, and discuss how potential employers might use information about where a candidate obtained his or her MBA degree to screen potential MBA job applicants.
Problem III
A recent MBAgraduategraduatefrom TAMIU is considering the following three possible jobs. The following table shows the possible incomes she might get in each job.
| Outcome A | Outcome B | ||||||||||||||||
| Probability | Earnings | Probability | Earnings | ||||||||||||||
| Job 1 | 0.5 | 30 | 0.5 | 50 | |||||||||||||
| Job 2 | 0.3 | 20 | 0.7 | 50 | |||||||||||||
| Job 3 | 0.9 | 45 | 0.1 | 5 | |||||||||||||
- Determine the expected value, variance , and the standard deviation for each job.
- Which job is more risky? Explain!
- If the job candidate is averse to risk what can you predict about her job choice?
- If the job candidate is risk neutral what can you predict about her job choice?
- Between Job 2 and Job 3, which one would you choose? Explain!
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