Appendix: Refer to Exhibit 15A-1

question 7

Essay

Appendix:
Refer to Exhibit 15A-1.
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Part C: What is the expected net profit under the simple profit sharing contract,and why would the partners adopt an incentive-compatible revelation mechanism (i.e.,an optimal incentives contract)?

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Definitions:

Weight Lifting

A form of strength training using the lifting of weights as resistance to build muscle and increase physical power.

Kilocalories

A measurement unit for energy, commonly used to represent the energy content in food; equivalent to 1,000 calories.

Vigorous Physical Activity

Repetitive activities using large muscle groups at 70 percent or more of maximum heart rate. On a scale relative to an individual’s personal capacity, vigorous physical activity is usually a 7 or 8 on a scale of 0 to 10.

Motivational Counseling

A counseling approach that seeks to increase a person's motivation to effect change in their behavior.