8. What is the difference between economic profit and producer surplus? Use a graph to illustrate the producer surplus: 9. Discuss the four types of auctions and explain the winners curse? 10. What is price discrimination? Use a groph illustrate the price discrimination and explain why it is sustainable. Give some examples of third-degree price discrimination. Can third-degree price discrimination be effective if the different groups of consumers have different Jevels of demand but the same price elasticities? 11. A) What is principal agent problem, why it arises? How to correct for it? B) The weekly revenue, Riel of a retail store called sporting goods depends on the managers effort, e; the more effort she provides, the hires are revenue. The effort is the number of hours worked. However, because many of the working hours are not spent in the store, the owner does not know directly how many hours the manager works. Assume that even if the managel supplies no effort, revenue would equal 3500. Effort by the manager causes revenue to increase by 100e0.5. Thus, revenue can be written as R(e)=3,500+100e0.5 But the manager incurs a disutility for supplying the effort of U(e)=853.55+(7.07)e In addition to paying the managers salary, the shareholders must be production costs of 1,00 To be persuaded to work for the store the manager must receive a net benefit, B(e), of 1,000 be persuaded to work for the store, the manager must receive a net benefit, B (e), of 1000 if receives less, she will leave and take another job. How much effort, e, will the manager supply? How much weekly profit, p(e), will be made? How much of this profit will be paid to the manager? 8. What is the difference between economic profit and producer surplus? Use a graph to illustrate the producer surplus: 9. Discuss the four types of auctions and explain the winners curse? 10. What is price discrimination? Use a groph illustrate the price discrimination and explain why it is sustainable. Give some examples of third-degree price discrimination. Can third-degree price discrimination be effective if the different groups of consumers have different Jevels of demand but the same price elasticities? 11. A) What is principal agent problem, why it arises? How to correct for it? B) The weekly revenue, Riel of a retail store called sporting goods depends on the managers effort, e; the more effort she provides, the hires are revenue. The effort is the number of hours worked. However, because many of the working hours are not spent in the store, the owner does not know directly how many hours the manager works. Assume that even if the managel supplies no effort, revenue would equal 3500. Effort by the manager causes revenue to increase by 100e0.5. Thus, revenue can be written as R(e)=3,500+100e0.5 But the manager incurs a disutility for supplying the effort of U(e)=853.55+(7.07)e In addition to paying the managers salary, the shareholders must be production costs of 1,00 To be persuaded to work for the store the manager must receive a net benefit, B(e), of 1,000 be persuaded to work for the store, the manager must receive a net benefit, B (e), of 1000 if receives less, she will leave and take another job. How much effort, e, will the manager supply? How much weekly profit, p(e), will be made? How much of this profit will be paid to the manager
