A firm requires 96 units of good Q. The firm can only hire one worker to produce these 96 units. The firm pays its worker a fixed wage. The worker’s production function is Q(e) = 24e The worker’s effort cost function is C(e) = 4e² The worker gets 0 if unemployed. Treat the good as continuous. Assume the firms pay the lowest fixed wage it can. What wage does it pay?
A firm requires 96 units of good Q. The firm can only hire one worker to produce these 96 units. The firm pays its worker a fixed wage. The worker’s production function is Q(e) = 24e The worker’s effort cost function is C(e) = 4e² The worker gets 0 if unemployed. Treat the good as continuous. Assume the firms pay the lowest fixed wage it can. What wage does it pay?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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A firm requires 96 units of good Q.
The firm can only hire one worker to produce these 96 units.
The firm pays its worker a fixed wage.
The worker’s production function is Q(e) = 24e
The worker’s effort cost function is C(e) = 4e²
The worker gets 0 if
Treat the good as continuous.
Assume the firms pay the lowest fixed wage it can. What wage does it pay?
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