Incentives Effort You are a division manager for the logging firm of Karrde Incorporated. You are planning to offer a contract to Jade Enterprises for constructing logging roads in the Myrkr Forest. It is imperative that the roads are wide enough; if the roads are wide enough, Karrde's profit will be 120, while it will only be 60 if the roads are too narrow. (Karrde's profits are 0 if it does not hire Jade.) You have the opportunity to make a take-it-or-leave-it offer to Jade, but you can not set the payment below 0 for any outcome. Whether or not the roads are wide enough depends crucially on Jade's effort: If Jade exerts low effort, then the probability of success is only one third; if Jade exerts medium effort, the probability of success is two thirds; and if Jade exerts high effort, success is guaranteed. Jade Enterprises is a small concern. If Jade does not take the job, its utility is 2. If Jade takes the job, and exerts low effort, its utility is ?w, where w ? 0 is the payment to Jade. If Jade takes the job and exerts medium effort, its utility is given by ?w ? 1. Finally, if Jade takes the job and exerts high effort its utility is given by ?w ? 3.

a) Suppose that you can observe the effort that Jade exerts, and so can write contract where payment is contingent on effort. If you wish to incentives low effort, what is the most profitable contract you can offer? If you wish to incentives medium effort, what is the most profitable contract you can offer? If you wish to incentives high effort, what is the most profitable contract you can offer? Given your answers to the previous questions, which is the most profitable contract for Karrde to offer Jade?

b) Now suppose (for the rest of this problem) you can not observe effort. If you wish to write the most profitable contract that incentives low effort, what contract will you write? Does it differ from the contract for low effort in part a)?

c) If you wish to write the most profitable contract that incentives medium effort, what contract will you write? How does it differ from the contract in part a) for medium effort?

d) If you wish to write the most profitable contract that incentives high effort, what contract will you write? How does it differ from the contract in part a) for high effort?

e) Consider your answers to the previous parts of this question. What contract will you offer to Jade?that is, what contract maximizes your profits? Does this contract incentives the same level of effort as the contract you offered in part a)? Why or why not?

QUESTION 15 which of the following counts as US GDP? 50 Boeing 737 produced in Seattle and sold to Chinese airline Air China 5000 Focus produced by a Ford company in Beijing, China O 10,000 bottles of expensive wine imported from Northern Italy, Brescia, consumed in San Diego 5 million copies of Adele CDs produced in London, and purchased by US Adele fans QUESTION 16 As published by the BEA in September, the Nominal GDP for the second quarter of 2019 is and the real GDP growth rate the second quarter of 2019 is O $ 17.03 trillion, 3% O $ 21.34 trillion, 2.1% C $ 17.03 trillion, 1.2% O $ 19.25 trillion, 1.2%QUESTION 23 An overheating economy is one where O A. Workers' job performance lags due to slow changes in technology. O B. Actual real GDP is below the full employment level of GDP. O C. The full employment level of GDP is almost equal to actual real GDP. OD. Actual real GDP is above the full employment level of GDP. QUESTION 24 The long-run aggregate supply curve is A. Upward sloping because of the effects of price level changes on real GDP. O B. The same as the short-run aggregate supply curve. O C. Vertical at the full-employment level of real GDP. O D. Horizontal at the full employment price level.Complete this question by entering your answers in the tabs below. Balance Sheet Balance Sheet 2018 2019 Prepare the balance sheet for the business as of December 31, 2018. Hint: Report only total equity 0n the balance sheet and remember that total equity equals the difference between assets and liabilities. "otal equity Total assets $ 0 "otal liabilities and equity $ 0 Balance Sheet 2019 > Complete this question by entering your answers in the tabs below. Balance Sheet Balance Sheet 2018 2019 Prepare the balance sheet for the business as of December 31, 2019. Hint: Report only total equity on the balance sheet and remember that total equity equals the difference between assets and liabilities. NETTLE DISTRIBUTION Balance Sheet December 31, 2019 Assets Liabilities Total liabilities Equity Total equity Total assets 0 Total liabilities and equity 0 D Question 11 1 pts AS 150 125 Price level 100 (CPI 75 50 AD? 25 AD 0 2 4 6 8 10 12 Real GDP (billions of dollars per year) In the graph above, point Ez represents: O real GDP above full-employment GDP. O real GDP that equals full-employment GDP. O a depression. O real GDP below full-employment GDP. D Question 12 1 pts AS 150 125 Price level 100 (CPD) 75 50 AD? TAD 0 2 4 6 8 10 12 Real GDP (billions of dollars per year) As the economy moves to the right in the graph above along the upward-sloping aggregate supply curve the: O unemployment rate rises. unemployment rate falls. O inflation rate falls. O none of these