To find the performance level that trigger the bonus and two criticisms of incentive bonus plan.

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A large mountain area in Western Norway has very favorable wind conditions and opportunity to establish a wind farm for the production of electric power which can be sold in the European power market. The company Power has previously gained the exclusive right to develop the area for power production. Let x be the number of dmøller set up in the area. The area is used by many people as recreation area, and is close to a major city. Power's profit depends on how many wind turbines set up. Let the profit be given by IP (X) = 100x - 5x 2 Two groups are negatively affected by the wind turbine development, the local population gen and the local tourism industry that sells adventure travel to foreign countries tourists. The value of the local population of the area given by the following function 1 V L (x) = V 0 - 30x - X 2 2 The tourism industry's profit is given by the following function πτ(x) πο- 10x- 1 X 2

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Chapter 1, Problem 1.2CE

To determine

To find the performance level that trigger the bonus and two criticisms of incentive bonus plan.

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A large mountain area in Western Norway has very favorable wind conditions and opportunity to establish a wind farm for the production of electric power which can be sold in the European power market. The company Power has previously gained the exclusive right to develop the area for power production. Let x be the number of dmøller set up in the area. The area is used by many people as recreation area, and is close to a major city. Power's profit depends on how many wind turbines set up. Let the profit be given by IP (X) = 100x - 5x 2 Two groups are negatively affected by the wind turbine development, the local population gen and the local tourism industry that sells adventure travel to foreign countries tourists. The value of the local population of the area given by the following function 1 V L (x) = V 0 - 30x - X 2 2 The tourism industry's profit is given by the following function πτ(x) πο- 10x- 1 X 2

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You are given the following data for your firm, which sells a patented super-absorbent cleaning towel for use in large retail complexes (called “One Wring to Rule the Mall” ©). Q P TC 0 $215 $2,700.00 10 $208 $4,062.50 20 $201 $5,180.00 30 $194 $6,157.50 40 $187 $7,100.00 50 $180 $8,112.50 60 $173 $9,300.00 70 $166 $10,767.50 80 $159 $12,620.00 90 $152 $14,962.50 100 $145 $17,900.00 Determine equations for P=f(Q), MR=f(Q), ATC=f(Q, Q2), AVC=f(Q, Q2), MC=f(Q, Q2). Recall that your marginal equations should be derivatives of your totals! Determine the profit-maximizing price and quantity. (Since MC is in terms of Q2, solving with calculus and algebra can be messy unless you know the quadratic formula. Your table should give an exact answer.) How much total profit would your firm earn if you set P and Q according to part b? Describe the competitiveness of the market by calculating the…