The owner of a thriving business wants to open a new office in a distant city. If he can hire someone who will manage the new office honestly, he can afford to pay that person a weekly salary of $2,000 ($1,000 more than the manager would be able to earn elsewhere and still earn an economic profit of $500. The owner's concern is that he will not be able to monitor the manager's behavior and that the manager would therefore be in a position to embezzle money from the business. The owner knows that if the remote office is managed dishonestly, the manager can earn $3,500, which results in an economic loss of $400 per week. (Hint. Construct a decision tree to help you answer the questions below.) a. If the owner believes that all managers are narrowly self-interested income maximizers, will he open the new office? O Yes O No b. Suppose the owner knows that a managerial candidate condemns dishonest behavior, and who would be willing to pay up to $5,000 to avoid the guilt she would feel if she were dishonest. Will the owner open the remote office? O Yes O No

The owner of a thriving business wants to open a new office in a distant city. If he can hire someone who will manage the new office honestly, he can afford to pay that person a weekly salary of $2,000 ($1,000 more than the manager would be able to earn elsewhere and still earn an economic profit of $500. The owner's concern is that he will not be able to monitor the manager's behavior and that the manager would therefore be in a position to embezzle money from the business. The owner knows that if the remote office is managed dishonestly, the manager can earn $3,500, which results in an economic loss of $400 per week. (Hint. Construct a decision tree to help you answer the questions below.) a. If the owner believes that all managers are narrowly self-interested income maximizers, will he open the new office? O Yes O No b. Suppose the owner knows that a managerial candidate condemns dishonest behavior, and who would be willing to pay up to $5,000 to avoid the guilt she would feel if she were dishonest. Will the owner open the remote office? O Yes O No

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College Algebra (MindTap Course List)

12th Edition

ISBN:9781305652231

Author:R. David Gustafson, Jeff Hughes

Publisher:R. David Gustafson, Jeff Hughes

Chapter6: Linear Systems

Section6.8: Linear Programming

Problem 5SC: If during the following year it is predicted that each comedy skit will generate 30 thousand and...

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Concept explainers

Unitary Method

The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.

Speed, Time, and Distance

Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.

Profit and Loss

The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.

Units and Measurements

Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.

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Question

The owner of a thriving business wants to open a new office in a distant city. If he can hire someone who will manage the new office
honestly, he can afford to pay that person a weekly salary of $2,000 ($1,000 more than the manager would be able to earn elsewhere)
and still earn an economic profit of $500. The owner's concern is that he will not be able to monitor the manager's behavior and that
the manager would therefore be in a position to embezzle money from the business. The owner knows that if the remote office is
managed dishonestly, the manager can earn $3,500, which results in an economic loss of $400 per week. (Hint. Construct a decision
tree to help you answer the questions below.)
a. If the owner believes that all managers are narrowly self-interested income maximizers, will he open the new office?
O Yes
O No
b. Suppose the owner knows that a managerial candidate condemns dishonest behavior, and who would be willing to pay up to
$5,000 to avoid the guilt she would feel if she were dishonest. Will the owner open the remote office?
O Yes
O No

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