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Recently, the owner of a Trader Joe’s franchise decided to change how she compensated her top manager. Last year, she paid him a fixed salary of $60,000 and her store made $130,000 in profits (not counting payment to her top manager). She suspected the store could do much better and feared the fixed salary was causing her top manager to shirk on the job. Therefore, this year she decided to offer him a fixed salary of $31,000 plus 16% of the store’s profits. Since the change, the store is performing much better, and she forecasts profits this year to be $280,000 (again, not counting the payment to her top manager). Assuming the change in compensation is the reason for the increased profits, and that the forecast is accurate, how much more money will the owner make (net of payment to her top manager) because of this change?
Consider the Tragedy of the Commons game with two shepherds, A and B. LetsA and sB denote the number of sheep each shepherd grazes on the common pasture. Assume the benefit per sheep equals 300−sA −sB. Compute the flock sizes and shepherds’ total ben..
How is it possible for some people to pay "negative" taxes? Why is it important to distinguish between deficits and debt? Why may a budget surplus be considered undesirable?
It has just been announced that large deposits of oil have been discovered in Chile. It will take five years for production to begin, but after that time Chile will become the world's largest oil producer by a large margin. How and why does this anno..
Select a country and research whether trade and immigration has worsen wage inequality. What are some possible solutions to reduce the amount of wage inequality?
An indifference curve a. Is a locus of bundles of goods such that each good in every bundle yields equal satisfaction b. Is a locus of bundles of goods such that the consumer is indifferent between each good in every bundle c. Is a locus of bundles o..
An engineer invested $10,000 in the stock market. For the first six years, the average return was 8% annually. For the next four years, the return as 4% annually. What is the value of the account after 10 years? What is the effective annual rate of r..
Suppose that a proposal is under review to strengthen the NPDWS for benzene, and the associated abatement level would generate a marginal social benefit (MSB) that is greater than the marginal social cost (MSC) by $125,000. On efficiency grounds, sho..
Valles Global Industries (VGI) is considering selling a product. The contract sells parts for revenue of $65 million a year for 5 years. Their initial investment is $250 million and the equipment has no salvage at 5 years. They estimate production co..
q.assume which wall-world and turbo are independently deciding whether to implement a new bar code technique. as
How would you determine the demand for a factor of production? What factors influence the supply and demand for labor? Examine how those factors impact market demand for labor. How do labor unions try to increase the demand for labor? What has made l..
Alexander Hamilton and John Marshall were both leading Federalists. How do the views expressed by Marshall in the Supreme Court decision Mar bury v. Madison and those expressed by Hamilton in his opinion regarding the constitutionality of the nationa..
You purchased an immediate annuity which pays you $3,000 each year from next year for 15 years. Assuming interest rate is 5%, how much is the equivalent present value of these payments? The future value of $1,000 saved for 20 years at 5% interest is:
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