Mr.Barnes operates a power plant in the local market.His marginal revenue of average employee effort level is: MR(e)= 25 - e.The marginal cost of effort to Mr.Barnes is:
MC(e)= w.Employees set their effort level according to: e = 
,where 
is the average wage at all other jobs in the local market.Currently,this average is $7.50.If Mr.Barnes pays a wage rate of $7.50,is he maximizing profits? If not,what wage rate should Mr.Barnes pay?
Definitions:
Specialized Jobs
Positions that require a specific set of skills, knowledge, or expertise, often within a niche area.
Decision Making
The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.
Competency
An area of personal capability that enables employees to perform their work successfully.
Personal Capability
Refers to an individual's ability to perform tasks, solve problems, and make decisions in work and personal life.
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