Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. Her wage package is W = 1,000 + 0.4Q, where Q is her dollar volume of sales. Her productivity is Q = 200e + µ, where e denotes her hours of effort and µ is a random variable with mean 0. She has an effort cost of C = e2. Under this contract, the expected value of her total wages will be:
A. $4,200.00.
B. $3,060.00.
C. $1,000.00.
D. $200.00.
Answer: A
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a. True b. False