Always Round Tires hires Plain Truth Advertising to write a copy for its newspaper advertisements. Always Round has a demand for advertising of MB=400-2S where S is the number of hours that Plain Truth delivers, and Plain Truth has a fixed supply cost: MC=$150 per hour. Assuming that there is no agency problem, how many hours should Always Round purchase from Plain Truth?

Assuming that there is no agency problem, what's the total surplus?

Now, if the copy writers are slackers an only deliver 100 hours of work each week after each company spends $1,250 in monitoring or bonding costs, what is the total cost of this agency problem after monitoring and bonding?