Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. Her compensation package for a week is W = 1,000 + 0.4Q, where Q is her dollar volume of sales. Her productivity is = 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, her choice of effort will be:
A. 0 hours per week.
B. 40 hours per week.
C. 20 hours per week.
D. 80 hours per week.
Answer: B
You might also like to view...
Most of the migration in the world involves people who are moving from countries with relatively ____ GDP per capita to countries with relatively _____ GDP per capita.
a. high; low b. low; low c. low; high d. high; high
In order to promote growth through increased quantities of physical capital, governments must promote:
A. a better educational system. B. high rates of saving and investing. C. job training programs. D. funding for basic science.
As the result of an increase in the price of capital, the demand for labor would ________, the supply of labor would ________, and the quantity of labor hired would ________
A) decrease; remain the same; decrease B) decrease; decrease; decrease C) decrease; increase; remain the same D) increase; remain the same; decrease
A reason why a firm's demand for labor curve slopes downward is that, holding everything else constant,
A) the extra cost of hiring additional units of labor increases as a firm hires more units of labor. B) as more labor is hired, labor's marginal product falls due to diminishing marginal returns. C) the firm's demand curve for the product produced by the labor is downward sloping. D) each additional unit of labor hired is less efficient than previously hired units.