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Question 16 Suppose a firm hires a new worker, Jens H. Because the firm knows Jens H. can work hard or shirk, and because monitoring Jens H's effort is costly, the firm wants to give him the right incentive to work hard. If the minimum monthly wage the firm can pay Jens H. for him to work hard is $2,000, how much does Jens H. value his effort if the probability that he leaves for another job is 63D0.09 and the probability that he gets caught shirking and thus fired is q=0.03? O $666.67 O $240 O $500 O $120

Question 16 Suppose a firm hires a new worker, Jens H. Because the firm knows Jens H. can work hard or shirk, and because monitoring Jens H's effort is costly, the firm wants to give him the right incentive to work hard. If the minimum monthly wage the firm can pay Jens H. for him to work hard is $2,000, how much does Jens H. value his effort if the probability that he leaves for another job is 63D0.09 and the probability that he gets caught shirking and thus fired is q=0.03? O $666.67 O $240 O $500 O $120

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 16 Suppose a firm hires a new worker, Jens H. Because the firm knows Jens H. can work hard or shirk, and because monitoring Jens H's effort is costly, the fırm wants to give him the right incentive to work hard. If the minimum monthly wage the firm can pay Jens H. for him to work hard is $2,000, how much does Jens H. value his effort if the probability that he leaves for another job is b=0.09 and the probability that he gets caught shirking and thus fired is q=0.03? O $666.67 O $240 O $500 O $120
Transcribed Image Text:Question 16 Suppose a firm hires a new worker, Jens H. Because the firm knows Jens H. can work hard or shirk, and because monitoring Jens H's effort is costly, the fırm wants to give him the right incentive to work hard. If the minimum monthly wage the firm can pay Jens H. for him to work hard is $2,000, how much does Jens H. value his effort if the probability that he leaves for another job is b=0.09 and the probability that he gets caught shirking and thus fired is q=0.03? O $666.67 O $240 O $500 O $120
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