____ occurs when a consumer's quantity demanded for a good increases because a ____ number of consumers purchase the same good

What does it mean when a firm is earning positive economic profit?

What will be an ideal response?

A executive can either slack (effort e = 0) or work hard (e = 1) on behalf of shareholders. If she slacks, the firm earns a gross return of 1,000 for sure. If she works hard, there is an even chance of the gross return being 10,000 or 80,000 . Her overall utility equals her utility from wage income (of the form w1/2, where w is the wage) minus the disutility of work (simply d), or in other words

U = w1/2 – d. If she slacks, she experiences no disutility of work (d = 0) but if she works hard, the disutility of work is d = 50 . Assume that U = 0 in her next best available job. What is the optimal wage contract that shareholders would offer if they can observe the effort of the executive? a. A flat wage w = 0 and no requirement to work hard. b. A flat wage w = 50 and a requirement to work hard. c. A flat wage w = 2,500 and a requirement to work hard. d. A share of 50% of the profits and a requirement to work hard.