Suppose that the expected value of weekly profits for an ice cream shop, before paying the manager, Amy, is E(x) = 500+ 5e, where e is Amy's weekly overtime hours. Amy is risk-neutral but incurs a cost for working overtime. Thus, total expected surplus is What level of effort maximizes total surplus? The value of overtime that maximizes total surplus is e= C(e) = e² E(S)=E(¹) - C(e). hours. (Enter your response rounded to one decimal place.)

Suppose that the expected value of weekly profits for an ice cream shop, before paying the manager, Amy, is E(x) = 500+ 5e, where e is Amy's weekly overtime hours. Amy is risk-neutral but incurs a cost for working overtime. Thus, total expected surplus is What level of effort maximizes total surplus? The value of overtime that maximizes total surplus is e= C(e) = e² E(S)=E(¹) - C(e). hours. (Enter your response rounded to one decimal place.)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.10P

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