Week 7 – Analyze how firms make hiring decisions
Topic 7
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1. Analyze how firms make hiring decisions and how equilibrium wages are determined in the labor market.
2. Analyze imperfections in the labor market and how they affect wages and employment.
3. Determine how to structure incentives, such as wages or other compensations, to maximize employee effort and align workers’ objectives with those of the firm.
4. Determine the effects of moral hazard and the principal-agent problem on the employee and employer relationship
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