Old MacDonald produces hay. He has a single employee, Jack. If Jack works for x hours he
Question:
(a) What is the efficient number of bales of hay for Jack to cut? _____________
(b) If the most that Jack could earn elsewhere is zero, how much would MacDonald have to pay him to get him to work the efficient amount? ______________
(c) What is MacDonald’s net profit? _______________
(d) Suppose that Jack would receive $1 for passing out leaflets, an activity that involves no effort whatsoever. How much would he have to receive from MacDonald for producing the efficient number of bales of hay? ____________
(e) Suppose now that the opportunity for passing out leaflets is no longer available, but that MacDonald decides to rent his hayfield out to Jack for a flat fee. How much would he rent it for? ___________
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