=+10.11 Business Application: Negotiating an Endorsement Deal and a Bribe: Suppose you are an amateur athlete and your uncle owns the cereal company “Wheaties.” Your uncle offers you a job working for his company at a wage of w per hour. After looking around for other jobs, you find that the most you could make elsewhere is wr, where wr , w. You have a weekly leisure endowment of L and can allocate any amount of that to work. Given the higher wage at Wheaties, you accept your uncle’s job offer.

A. Then you win a gold medal in the Olympics. “Greeties,” the makers of grits, ask you for an endorsement. As part of the deal, they will pay you some fixed weekly amount to appear on their boxes of grits. Unfortunately, your uncle (who hates his competitor “Greeties” with the white hot intensity of a thousand suns) will fire you if you accept the deal offered by “Greeties.” Therefore, if you accept the deal, your wage falls to wr.