Always Round Tire Hires Plain Truth Advertising to Write Copy

question 42

Essay

Always Round Tire hires Plain Truth Advertising to write copy for its newspaper advertisements.Always Round has a demand for advertising of MB = 400 − 2S where S is the number of hours that Plain Truth works.If Plain Truth has a fixed supply cost given by MC = $150 per hour,what are the number of hours that Always Round purchases from Plain Truth under the assumption of costless monitoring? How much is the contract worth to Always Round? If Always Round offers half of the surplus to Plain Truth as an incentive,how much is Plain Truth paid for the job?

---

Definitions:

Selection Differences

The biased allocation of participants into groups in an experimental design, which can affect the outcome.

Researchers

Individuals who conduct studies and investigations to discover new information and insights.

Pre-existing Groups

Groups in research studies that are formed based on characteristics or conditions present before the study, not created by the researcher.

Nonequivalent Control Group Design

An experimental design in which the control group is not randomly selected or assigned, potentially allowing for confounding variables.