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## Consider the salary of Mary Sue Nelson, a sales agent for Pl

Paper help Economics Consider the salary of Mary Sue Nelson, a sales agent for Pl

# Consider the salary of Mary Sue Nelson, a sales agent for Pl

Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort… Show more Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort cost of C = e 2 and she a reservation wage of \$1,500 so that wage package is W = 1,500 + .2 Q where the CEO sets the incentive at .2 and Q = 200 e. If the CEO increases the incentive from .2 to .25, what happens to the Nelson’s effort? Will profits rise or fall? I need a detailed answer, show every steps. This is the right answer, I need the mathematical explanation: Therefore her effort increases. Expected output goes up to Q =5,000. Expected wages are 2,750. Expected profit will rise in this case to 2,250. • Show less

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