Suppose the company agrees to subsidize mark learning

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Reference no: EM131899198

Mark works for Maple Feel Inc., which exports maple syrup to Hungary. Currently, he generates $45,000 a year of net revenues for the firm and his salary is $45,000 per year. Mark is planning to hire a private teacher to learn some Hungarian. His only cost would be the teacher’s fee of $60 per hour. Mark knows that if he devotes H hours to the study of the Hungarian language, his ability to generate revenues from sales in Hungary will increase to $45,000 + $1,200H^(1/2) per year. Mark will retire after one more year of working. a) Suppose there are many similar companies trying to export goods to Hungary and in each of them Mark’s knowledge of the Hungarian language would be equally useful as in Maple Feel. How many hours will he devote to learning Hungarian? B)Now suppose that Maple Feel is the only company in which Mark’s knowledge of Hungarian could be useful and that Mark’s bargaining power is such that he could negotiate a wage increase equal to 25% of the gains from his increased productivity. How many hours will Mark devote to learning Hungarian if he bears the full cost of his study? C) Suppose the company agrees to subsidize Mark’s learning. How much of the $60 hourly fee will be paid by the company if they want Mark to study the efficient number of hours?

Reference no: EM131899198

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