Leontief Associates Has Expanded to Include N Partners

question 27

Essay

Leontief Associates has expanded to include n partners. Its new technology is B min(e₁, e₂, , e_n). The income
of each partner is Y/n. The utility functions are u_i = y_i - e_i².
i)Describe the Pareto efficient effort levels, the corresponding income levels, and the utility of a typical partner when everyone behaves efficiently.
ii)Suppose the firm is bought by a new owner. Describe an employment contract the new owner would use to get each employee to contribute the efficient effort level.

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Definitions:

Compact Bone

The denser, stronger outer layer of bone tissue that provides strength and protection to the bone structure.

Joint Inflammation

The swelling and irritation of a joint, often featuring pain, redness, and restricted movement, typically a sign of arthritis or other joint disorders.

Coccyx

A small, triangular-shaped bone consisting of three to five fused vertebrae.

Vertebrae

The individual bones that make up the vertebral column (spine), providing structural support and protecting the spinal cord.