For problem 3 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.

3. What commission rate will yield the profit-maximizing level of output? Show your work, and include a graph showing the marginal cost of effort, marginal sales commission, marginal net revenue, and marginal total revenue.