1.Suppose that ASSEMCO is on the verge of signing a 20 year contract with AIRCO to support them with airbags to add to their assembled cars. Just prior to signing the contract, one of the competitors of AIRCO introduces a comparable airbag using a new technology that reduces the cost by 25%. How would this information affect optimal contract length with AIRCO? 2. ASSEMCO reported record profits of $1000,000 last year and is expected to exceed these profits this year. ASSEMCO is operating in a very competitive market where many of the firms are merging in an attempt to gain competitive advantages. Currently, the CEO of ASSEMCO is compensated with a fixed salary which does not include any performance bonuses. Explain whether this manager has a strong incrntive to continue to maximize the firm's profits and why? 3. A company is relying on its sales personnel to sell its products. The company pays each a salary plus a commission on their sales revenues. To reduce its expenses, the company switched from giving every salesperson a car, to reimbursing them for each business related mile driven. Can you suggest an alternative way to restructure the compensation of the company that could increase revenues but at the same time reduce costs