A risk-neutral employer wants to hire a risk-neutral employee. The employee can be of two types: bad or good. The bad-type employee has a cost of effort equal to 292, where e is the level of effort provided. The good-type employee has a cost of effort equal to .92. The bad-type employee's utility net of the cost of effort is HR = w 232, where w is the wage paid by the employer. The good-type employee's utility net of the cost of effort is [IS = w 32. The probability the employee is of the bad-type is 393 E[0,1] and the probability the employee is of the good-type is pG E[0,1] with pa + pa = 1. The outside utility is U0 = 0 for any employee. The employer's prot is n = e w. Suppose initially there is no asymmetry of information. Assume the employer knows for sure she is facing a good-type employee. As such, the employer offers a contract specifying a wage wG and an effort level ea. 6) Write the participation constraint that needs to be satised such that the good-type employee accepts the contract proposed by the employer. 7) Find the effort level that maximizes the employer's prot when hiring a good-type employee. Assume instead the employer knows for sure she is facing a bad-type employee. As such, the employer offers a contract specifying a wage wB and an effort level .93. 8) Write the participation constraint that needs to be satised such that the bad-type employee accepts the contract proposed by the employer. 9) Find the effort level that maximizes the employer's prot when hiring a bad-type employee