Suppose that the expected value of weekly profits for an ice cream shop, before paying the manager, Amy, is where e is Amy's weekly avertime hours. Amy is risk neutral but incurs a cost for working overtime. Thus, tatal expected surplus is What level of effort maximizes total surplus? The value of overtime that maximizes total surplus is e-hours. (Enter your reaponse rounded to one decimal place.) E(x)=500-10 Cle) -² E(S)-[(x)-Cle).

`Question: Feng is the owner of a small business. When Feng has worked hard (an) during the year, net income before manager compensation has been $1,600 for 60 percent of the time and $400 for 40 percent of the time. More recently, Feng has been ill and has had to shirk (az). Net income has been $1,600 only 30 percent of the time and $400 for 70 percent of the time. Feng realizes that he must hire a manager for one year while he devotes full time to his recovery. Feng is risk-neutral, with utility equal to the amount of net income for the year after manager compensation. Feng is negotiating with Shui for the manager job. He ascertains that Shui is risk-averse, with utility equal to the square root of the dollar compensation received. Shui is willing to work for Feng providing she receives expected utility of at least 6. Shui advises Feng that she is effort-averse, with disutility of effort of 3 if she works hard, and 2 if she does not work hard. Required a. Feng suggests a salary of…

Explain a Contact Curve?

Effort Investment Risk Farmer's ownership Fixed land rental Sharecropping Farmer E's production function is 20 x VI (Y is the final output, Lis labor input) Y = According to theory, E's effort will be the lowest under which ownership? ( you should be able to answer this question without calculation ) According to theory, E will be facing the lowest level of risk under which land ownership? Why? Assuming E is working under a fixed land rental contract, with a yearly rent of 50. His twin brother F, who has exactly the same production function, is working with a different landlord who charges 20% of the yearly revenue. • (calculation) What is farmer E's profit function? • (calculation) What is his brother F's objective function? • How is the optimal effort defined? (only explain the concept) • (calculation) How much labor would E invest in his land (He knows exactly how his profit function looks like ) ? How much profit could he make under optimal effort? Assume his twin brother F doesn't…

A convenience store manager earns a base salary plus a small bonus of $60 for each of ten different possible monthly milestones he meets. If the manager meets a milestone, the full bonus is paid. However, if the manager falls even one penny short, none of that bonus is paid. Suppose each of the ten milestones requires 40 hours of effort to meet, and that the manager has 160 hours of effort to allocate to work each month. In order to maximize the total monthly bonus, the manager should allocate hours toward meeting each of    milestones and hours toward meeting each of the remaining    sales milestones.

Units of Total Average Marginal Product Product Product Labor 1 100 2 125 3 300 4 20 5 290 In the table above, diminishing returns Multiple Choice O begin with the first unit of labor. begin with the third unit of labor. O begin with the fourth unit of labor. begin with the fifth unit of labor. do not occur because output is positive for all levels of labor usage. O