Question: Patrick, the owner, makes the same offer to the manager at each of his stores: At the end of the year, pay me a lump-sum
Patrick, the owner, makes the same offer to the manager at each of his stores: “At the end of the year, pay me a lump-sum of $100,000, and you can keep any additional profit.” Astrid, a manager at one of the stores, gladly agrees, knowing that the total profit at the store will substantially exceed $100,000 if it is run well. If she is interested in maximizing her earnings, will Astrid act in a manner that maximizes the store’s total profit? Use a figure to illustrate your answer.
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