BUSI 620 MENTOR It's Your Life/busi620mentor.com BUSI 620 MENTOR It's Your Life/busi620mentor.com | Page 45
b ) Individual problems : 19 – 5 and 19 – 6 .
Individual Problem 19-5 : Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value . For example , suppose you ’ re trying to sell a company a new accounting system that will reduce costs by 10 %. Instead of naming that price , you offer to give them the product in exchange for 50 % of their cost savings . Describe the information asymmetry , the adverse selection problem , and why soft selling is a successful signal .
Individual Problem 19-6 : You need to hire some new employees to staff your start-up venture . You know that potential employees are distributed throughout the population as follows , but you can ’ t distinguish among them :
Employee Value Probability $ 50,000 0.25 $ 60,000 0.25 $ 70,000 0.25
b ) Individual problems : 19 – 5 and 19 – 6 .
Individual Problem 19-5 : Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value . For example , suppose you ’ re trying to sell a company a new accounting system that will reduce costs by 10 %. Instead of naming that price , you offer to give them the product in exchange for 50 % of their cost savings . Describe the information asymmetry , the adverse selection problem , and why soft selling is a successful signal .
Individual Problem 19-6 : You need to hire some new employees to staff your start-up venture . You know that potential employees are distributed throughout the population as follows , but you can ’ t distinguish among them :
Employee Value Probability $ 50,000 0.25 $ 60,000 0.25 $ 70,000 0.25