You are the manager of a firm that sells output at a price of $40 per unit. You are interested in hiring a new worker who will increase your firm's output by 2,000 units per year. Several other firms also are interested in hiring this worker.
a. What is the most you should be willing to pay this worker to come to your firm?
b. What will determine whether or not you actually have to offer this much to the worker to induce him to join your firm?