Maximization of economic profit for high mark

Assignment Help Macroeconomics
Reference no: EM1315479

High Mark Industries sells solar water heaters to households interested in lower energy bills and sustainable energy. High Mark has overproduced and has 600,000 water heaters sitting in inventory, which is double the number of units sold nationwide last year. The company wants to hire Rolando Maxima to oversee sales in its Pacific northwest territory - a territory that accounts for over 50% of its unit sales. Based on past performance, the average salesperson for this territory is able to sell (with full certainty) units on a monthly basis according to the following demand curve:

Qd = 20,000 - 40 P

The company knows with certainty that Rolando, with extra effort, can sell 4,000 more water heaters per month than the average salesperson no matter what price he charges. Rolando will accept the position at High Mark if it can match an offer of $3600 per month for a salaried position at another company. What type of compensation can High Mark offer and maximize its economic profit in the short term? (You do not need to production cost figures to answer this.) How might there be a potential principal-agent problem here?

Reference no: EM1315479

Questions Cloud

What money supply should the fed : Illustrate what money supply should the Fed set in yr 2009 if it wants to keep the price level stable?
Profit maximizing level of output-perfectly competitive firm : Consider the Figure below that represents a perfectly competitive firm
Think the industry environment is significantly dissimilar : Do you think the industry environment is significantly dissimilar today.
Computation of promised yield to maturity for cardiotronics : Computation of promised yield to maturity for Cardiotronic's zero coupon bonds and the probability of default that is implicit in the price of Cardiotronics outstanding zero-coupon bonds
Maximization of economic profit for high mark : High Mark Industries sells solar water heaters to households interested in lower energy bills and sustainable energy.
Computing value of coefficient in objective function : What is Excel formula in B9 giving first value of coefficient in the objective function?
Two pure strategy equilibria of a zero-sum game : Elucidate how which any two pure strategy equilibria of a zero-sum game are interchangeable also equivalent.
Creating the object oriented program : Create an abstract Employee class and two pure virtual functions - calculatePay() and displayEmployee(). Abstract Employee class will avoid a programmer from generating an object based on the Employee.
Costa rican supplier and their contract : Dell Electronics just stumbled upon a new supplier of personal computer (PC) circuitry in Costa Rica that can supply standardized computer inputs at $70 per PC.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd