What role does information cascade play in job interviews?
What will be an ideal response?
Information cascade plays an important role in job interviews. An employer may look at a candidate's resume and see that he has been unemployed for some time. Even if the interview goes well and the candidate seems well suited for the job, the employer may weigh the information that the candidate has so far been unsuccessful in finding work as a signal that everyone else thinks this worker is unqualified. The employer may then think that he is missing something important in his evaluation of the worker, and may ignore his own positive signals in favor of the information contained in the candidate's unemployment history. He won't offer the interviewee a job, and neither will the next employer. This information cascade prolongs the interviewee's joblessness.
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Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed below.CustomerReservation Price($/Rental)A22B16C12D8E6F4 Suppose Island Bikes knows that customers whose reservation prices are at least $10 always rent bikes before noon, while those whose reservation prices are below $10 never do so. If Island bikes charges a different price in the morning and in the afternoon, then what will be the total economic surplus?
A. $49 B. $3 C. $9 D. $41
In a mixed economy, the government plays some role in the working of free markets.
Answer the following statement true (T) or false (F)
Which of the following goods would most likely be an inferior good?
A. steak B. theater tickets C. French wines D. generic detergent
If a firm knew every consumer's willingness to pay and could prevent arbitrage it could charge every consumer a different price. This practice is known as
A) first-degree transfer of consumer surplus, or perfect price discrimination. B) first-degree price discrimination, or perfect price discrimination. C) maximization of producer surplus, or perfect price discrimination. D) first-degree exploitation, or perfect price discrimination.