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What happens to nelson effort

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Reference no: EM131719082

Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort cost of C = e2 and a reservation wage of $1,500 so that wage package is W = 1,500 + 0.2 Q where the CEO sets the incentive at 0.2 and Q = 200 e. If the CEO increases the incentive from 0.2 to 0.25, what happens to Nelson's effort? Will profits rise or fall?

Reference no: EM131719082

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