BARRION1981
16.10.2020 •
Business
Hilary sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Hilary realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Edison and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Hilary knows that if they both work hard, Edison will earn $90 on the beach and Hilary will earn $240 at her stand, so they will each take home half of their total revenue: If Edison shirks, he'll generate only $60 in earnings. Hilary does not know that Edison estimates his personal cost (or disutility) of working hard as opposed to shirking at $30. Once out of Hilary's sight, Edison faces a dilemma: work hard (put in full effort) or shirk (put in low effort).In terms of Edison's total utility, it is worse for him to (work hard or shirk). Taking into account the loss in utility that working hard brings to Edison, Hilary and Edison together ___ (are or are not) better off if Edison shirks instead of working hard.Hilary knows Edison will shirk if unsupervised. She considers hiring her good friend Carrie to keep an eye on Edison. The most Hilary should be willing to pay Carrie to supervise Edison, assuming supervision is sufficient to encourage Edison to work hard, is .
a. 55.
b. 30.
c. 25.
d. 20.It turns out that Hilary's friend Carrue is unavilable that day, so Hilary cannot find a reliable person to watch Edison. Which of the following arrangements will ensure that Edison works hard without making Hilary any worse off than she is when Edison shirks?A. Pay Edison $20, regardless of how many bottles of water he sells.B. Allow Edison to keep 75% of the revenue from the bottles of water he sells instead of 50%.C. Allow Edison to keep 57% of the revenue from the bottles of water he sells instead of 50%.D. Make Edison promise to work hard.
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Ответ:
A)In terms of Edison's total utility, it is worse for him to shirk. Taking into account the loss in utility that working hard brings to Edison, Hilary and Edison together are better off if Edison shirks instead of working hard.
B) $20
C) Allow Edison to keep 57% of the revenue from the bottles of water he sells instead of 50% (c)
Explanation:
If Edison works hard he will earn = $90
If Harry work hard he will earn = $240
They will both take home : (90 + 240) / 2 = 330 /2 = $165 each
If Edison shirks he will earn = $60
therefore the total revenue = 60 + 240 = 300
They will both take home : 300 / 2 = $150 each
A)In terms of Edison's total utility, it is worse for him to shirk. Taking into account the loss in utility that working hard brings to Edison, Hilary and Edison together are not better off if Edison shirks instead of working hard.
B) The most Hilary should be willing to pay Carrie
should be : Amount earned without shirking - Amount earned with shirking
= $165 - $150 = $15 the closest answer in the option is $20
C) . Allow Edison to keep 57% of the revenue from the bottles of water he sells instead of 50%
Ответ: