Shimadzu, a manufacturer of precise scientific instruments, relies heavily on the efforts of its local salespeople. Selling an instrument requires either luck, high effort, or some combination of the two. A salesperson who chooses to work hard has a 40 percent chance of selling an instrument in a given year while a salesperson who chooses to slack off has a 20 percent chance. Practically no one manages to sell more than one instrument in a single year. Contracts for salespeople are designed on a year-by-year basis. Sales staff members do not mind risk; they choose employers based only on expected wage and the disutility of effort. Disutility of effort is equivalent to $20,000 per year if they work hard and $o if they slack off. Even if a salesperson slacks off, he or sherequires an average salary of at least $50,000 not to seek alternate employment. Thus, the relevant data are: Effort Level Chance of success Cost High Effort 0.4 70,000 Slack Effort 0.2 50,000 1. What level of bonus and fixed payment are required to induce high effort? 2. If shimadzu receives a profit of $300,000 from each sale, what is its expected profit from inducing high effort?

Shimadzu, a manufacturer of precise scientific instruments, relies heavily on the efforts of its local salespeople. Selling an instrument requires either luck, high effort, or some combination of the two. A salesperson who chooses to work hard has a 40 percent chance of selling an instrument in a given year while a salesperson who chooses to slack off has a 20 percent chance. Practically no one manages to sell more than one instrument in a single year. Contracts for salespeople are designed on a year-by-year basis. Sales staff members do not mind risk; they choose employers based only on expected wage and the disutility of effort. Disutility of effort is equivalent to $20,000 per year if they work hard and $o if they slack off. Even if a salesperson slacks off, he or sherequires an average salary of at least $50,000 not to seek alternate employment. Thus, the relevant data are: Effort Level Chance of success Cost High Effort 0.4 70,000 Slack Effort 0.2 50,000 1. What level of bonus and fixed payment are required to induce high effort? 2. If shimadzu receives a profit of $300,000 from each sale, what is its expected profit from inducing high effort?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed in the attached table. If the tenants have the right to be free of loud music enforced through a property rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. Zero B. One C. Two D. Three E. It depends on transaction costs
Pls help ASAP
What are the Revenue projects?
There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed below. Assume the bar owner has the right to hire as many bands as she likes. Iftransaction costs were $90, split between the bar owner and the tenants, how manybands would play? What would social welfare be? A. Three bands would play and social welfare would be ‐100.B. Two bands would play and social welfare would be 75.C. Two bands would play and social welfare would be ‐15.D. No bands would play and social welfare would be 0.E. Three bands would play and social welfare would be ‐190
There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed below. If the tenants have the right to be free of loud music enforced through aproperty rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. ZeroB. OneC. TwoD. ThreeE. It depends on transaction costs
A device that cost 50000 at the start of the year lose 10% of its value each year. find out how much a book is worth when is 10 years old
Why being an OFW considered a choice and not an option?
help
What is the 4p ( Product, price, place, promotion) of caribou coffee ?
E2
How TR calculated?
Businesses that offer repayment plans for purchases are required by law to disclose the interest rate. But that dosent mean they let you go out of there way to let you know what it is. you have to read all the paper work. Find the interest rate for the follwing purchase. For a 312 square- foot family room, you choose carpert that costs $1.44 per square foot. The tax rate is 6.1% and youre offered 24 payemnts of 27.61. Round to one decimal, if necessary.