A manager derives satisfaction from income and leisure on the job (shirking).
a. If the manager is paid a fixed salary of $100,000, how much leisure will she consume on the job during an eight-hour day? Explain.
b. When the manager is given a salary of $100,000 plus 10 percent of the firm's profits, she chooses to spend six hours managing and two hours consuming leisure. Salary and bonus total $120,000. Does the manager necessarily prefer this situation to the situation in part (a)?

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The Answer of A manager derives satisfaction from income and leisure on the job (shirking).
a. If the manager is paid a fixed salary of $100,000, how much leisure will she consume on the job during an eight-hour day? Explain.
b. When the manager is given a salary of $100,000 plus 10 percent of the firm's profits, she chooses to spend six hours managing and two hours consuming leisure. Salary and bonus total $120,000. Does the manager necessarily prefer this situation to the situation in part (a)?

A Manager Derives Satisfaction from Income and Leisure on the Job