For problem 2, assume that workers are paid using a commission scheme with commission rate r and salary s, so their total pay from selling q units of output is rTR(q), where TR(q) is the total revenue when output is q. The firms total revenue function is TR(q)=250q-q2, and nonlabor costs are 50 per unit. The workers effort cost function is C(q)=40q+3q2, and the workers net benefit at the next best alternative employer is zero. When graphing functions, be sure to label each function and identify axes and intercepts. Its okay to place the requested functions on a single graph as long as each function is clearly visible and identified.

2. What level of output maximizes profit for the firm? Show your work. Show this level of output graphically, using the marginal net revenue function and the marginal cost of effort. (Youll need to add the marginal cost of effort to your graph.)