Y5 b) The table below shows that a sales agent can work with either low or high
Fantastic news! We've Found the answer you've been seeking!
Question:
Y5
Transcribed Image Text:
b) The table below shows that a sales agent can work with either low or high amount of effort. Low effort generates $5,000 or $10,000 profit (with probabilities given below), while high effort generates $10,000or $30, 000 profit (with probabilities given below) depending on some random factors ii) Bad luck (p=0.3) Good luck (p=0.7) 10,000 30,000 The cost of exerting low effort is zero while the cost of exerting high effort is 1000. i) iii) c) Low effort (e-0) 5,000 High effort (e-1) 10,000 Suppose the firm pays the worker a fixed wage, how much profit will the firm earn? (2Marks) Suppose that the firm offers the worker a wage of 2000 if it exerts high effort and zero if it exerts low effort, specify the bonus arrangement payment schedule (1 Mark) Specify the profit sharing arrangement (1 Mark) Copayment is used to deal with the problem of adverse selection. True/false, explain (2 Marks) b) The table below shows that a sales agent can work with either low or high amount of effort. Low effort generates $5,000 or $10,000 profit (with probabilities given below), while high effort generates $10,000or $30, 000 profit (with probabilities given below) depending on some random factors ii) Bad luck (p=0.3) Good luck (p=0.7) 10,000 30,000 The cost of exerting low effort is zero while the cost of exerting high effort is 1000. i) iii) c) Low effort (e-0) 5,000 High effort (e-1) 10,000 Suppose the firm pays the worker a fixed wage, how much profit will the firm earn? (2Marks) Suppose that the firm offers the worker a wage of 2000 if it exerts high effort and zero if it exerts low effort, specify the bonus arrangement payment schedule (1 Mark) Specify the profit sharing arrangement (1 Mark) Copayment is used to deal with the problem of adverse selection. True/false, explain (2 Marks)
Expert Answer:
Answer rating: 100% (QA)
i If the firm pays the worker a fixed wage the profit will be calculated based on the expected profi... View the full answer
Related Book For
Microeconomics
ISBN: 978-0321866349
14th canadian Edition
Authors: Christopher T.S. Ragan, Richard G Lipsey
Posted Date:
Students also viewed these economics questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...
-
In Exercises use a computer algebra system to analyze the graph of the function. Label any extrema and/or asymptotes that exist. f(x) || 1 xx2
-
Romano's Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12" and 16" frozen pizzas for September: ___________________________________ Units...
-
8. Compute the following mentally; find the exact answers. 1 brod bas a a. 38 2 1 3 b. 74 4 1
-
Happy Company operates four departments kitchen, bathroom, office and laundry. When preparing a departmental statement of financial performance, the stores accountant allocates indirect expenses...
-
Dillard Travey receives 5,000 tripods annually from Quality Suppliers to meet his annual demand. Dillard runs a large photographic outlet, and the tripods are used primarily with 35-mm cameras. The...
-
When a 295 g piece of iron at 190C is placed in a 95 g aluminum calorimeter cup containing 250 g of a liquid at 10C, the final temperature is observed to be 38C. Determine the specific heat of the...
-
Arndt, Inc., reported the following for 2024 and 2025 ($ in millions): a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2024 for $60 million. The cost...
-
If your nominal wage rises faster than the price level, we can say your real wage has and the purchasing power of your income has fallen; fallen risen; fallen risen; risen fallen; risen
-
Compare and contrast the least squares dummy variable estimator and the fixed effects estimator.
-
Perform Dickey-Fuller and augmented Dickey-Fuller tests for stationarity.
-
Consider the following T-ARCH model: \[\begin{aligned}& h_{t}=\delta+\alpha_{1} e_{t-1}^{2}+\gamma d_{t-1} e_{t-1}^{2} \\& d_{t}=\left\{\begin{array}{lll}1 & e_{t} <0 & \text { (bad news) } \\0 &...
-
a. Let \(I_{t-1}=\left\{e_{t-1}, e_{t-2}, \ldots ight\}\). Use the law of iterated iterations to show that \(E\left(e_{t} \mid I_{t-1} ight)=0\) implies \(E\left(e_{t} ight)=0\). b. Consider the...
-
The ARCH model is sometimes presented in the following multiplicative form: \[\begin{aligned}& y_{t}=\beta_{0}+e_{t} \\& e_{t}=z_{t} \sqrt{h_{t}}, z_{t} \sim N(0,1) \\& h_{t}=\alpha_{0}+\alpha_{1}...
-
A 53-year-old man with long-standing history of rectal prolapse presented for elective sigmoid resection with rectopexy. The patient underwent a pre-operative surgical office consultation weeks prior...
-
Q:1 Take any product or service offered in Pakistan and apply all determinents of customer Perceived value ?
-
Which of the following observed facts about an industry are inconsistent with its being a perfectly competitive industry? a. Different firms use different methods of production. b. The industry's...
-
Use the diagram from Question 5 to analyze the effects of imposing an import quota instead of a tariff to protect domestic shoe producers. Draw the diagram as in Question 5 and answer the following...
-
Consider the following costs and benefits associated with cleaning up a polluted city lake. a. Explain why the marginal cost of pollution reduction increases as the cleanliness of the water...
-
A fertilizer producing company purchases nitrates, phosphates, potash, and an inert chalk base and produces four different fertilizers A, B,C, and D. The cost of these nitrates, phosphates, potash,...
-
Heavy fuel oil, initially semisolid at $15^{\circ} \mathrm{C}$ is to be heated and pumped through a $15 \mathrm{~cm}$ diameter (inside) pipe at the rate of $20000 \mathrm{~kg} / \mathrm{h}$. The pipe...
-
The topological optimization is discussed in chapter 1. Here, we will consider a topological optimization problem for a chemical process plant. The layout of the chemical process plant has been shown...
Study smarter with the SolutionInn App