Mr. Barnes operates a power plant in the local market. His marginal revenue of average employee effort level is: The marginal cost of effort to Mr. Barnes is: Employees set their effort level according to: where is the average wage at all other jobs in the local market. Currently, this average is $7.50. If Mr. Barnes pays a wage rate of $7.50, is he maximizing profits? If not, what wage rate should Mr. Barnes pay?

Question

Mr. Barnes operates a power plant in the local market. His marginal revenue of average employee effort level is:  The marginal cost of effort to Mr. Barnes is:  Employees set their effort level according to:  where  is the average wage at all other jobs in the local market. Currently, this average is $7.50. If Mr. Barnes pays a wage rate of $7.50, is he maximizing profits? If not, what wage rate should Mr. Barnes pay?

Quizplus · Accepted Answer

The Answer of Mr. Barnes operates a power plant in the local market. His marginal revenue of average employee effort level is:  The marginal cost of effort to Mr. Barnes is:  Employees set their effort level according to:  where  is the average wage at all other jobs in the local market. Currently, this average is $7.50. If Mr. Barnes pays a wage rate of $7.50, is he maximizing profits? If not, what wage rate should Mr. Barnes pay?

Mr Barnes Operates a Power Plant in the Local Market