# Question: Describe how a manager who derives satisfaction from both income

Describe how a manager who derives satisfaction from both income and shirking allocates a 10- hour day between these activities when paid an annual, fixed salary of $ 100,000. When this same manager is given an annual, fixed salary of $ 100,000 and 4 percent of the firm’s profits— amounting to $ 130,000 per year— the manager chooses to work eight hours and shirks for two hours. Explain which of the compensation schemes the manager prefers.

**View Solution:**## Answer to relevant Questions

Suppose the marginal benefit of writing a contract is $ 100, independent of its length. Find the optimal contract length when the marginal cost of writing a contract of length L is: a. MC (L) = 30 + 4L. b. MC (L) = 40+ 5L. ...Suppose the own price elasticity of market demand for retail gasoline is 0.8, the Rothschild index is 0.5, and a typical gasoline retailer enjoys sales of $ 1.5 million annually. What is the price elasticity of demand for a ...The elasticity of demand for a firm’s product is -2.5 and its advertising elasticity of demand is 2.0.a. Determine the firm’s optimal advertising-to-sales ratio.b. If the firm’s revenues are $40,000, what is its ...The inverse demand for a homogeneous- product Stackelberg duopoly is P 16,000 4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 4,000QL and CF (QF) = 6,000QF. a. What is the follower’s ...Use the following normal- form game to answer the questions below.a. Identify the one- shot Nash equilibrium. b. Suppose the players know this game will be repeated exactly three times. Can they achieve payoffs that are ...Post your question