Consider the Salary of Mary Sue Nelson, a Sales Agent

question 21

Essay

Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort cost of C = e² and she a reservation wage of $1,500 so that wage package is W = 1,500 + .2 Q where the CEO sets the incentive at .2 and Q = 200 e. If the CEO increases the incentive from .2 to .25, what happens to the Nelson's effort? Will profits rise or fall?

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Definitions:

Private Employers

Organizations or individuals that operate and manage businesses which are not owned or controlled by the government, responsible for hiring employees under private employment agreements.

Pension Plans

Financial programs that provide income during retirement, sourced from employer and employee contributions.

Health Plans

Insurance policies or arrangements designed to cover healthcare costs and medical expenses.

OSHA

The Occupational Safety and Health Administration (OSHA) is a federal agency in the United States responsible for ensuring safe and healthy working conditions by setting and enforcing standards.