Question 30 4 pts Sherry hires Nicholas to manage her business. The following table shows Sherry's prots (before paying Nicholas) for two different levels of Nicholas's effort and two different demand levels. The cost of normal effort is $4 whereas the cost of high effort is $26. There is a 40% probability of weak demand and 60% probability of strong demand. What is the minimum percentage of prots Nicholas must get for him to exert high effort? (Input your answer as a percentage rather than a decimal; e.g., 16 rather than 0.16.) Weak Demand (40%)_ Strong Demand (60%) Normal Effort 20 40 High Effort 40 100 Adverse Selection. The table below shows the reservation wage and hourly value to a rm for three types of workers. For example, a type H worker will work for the rm if the wage is $18/hour. The value of a type H worker to the rm is $21/hour. The rm knows the information in the table below but it cannot distinguish workers when they apply for a job. Assume there are 50 potential workers of each type. Type Reservation Wage Value to Firm H 18 21 M 13 15 L 8 9 Several steps are required to obtain the answer to the question below. Intermediate Step A: Suppose the rm believes that all three types of workers are applying for employment and thus there is an equal probability that the successful applicant is type H, M or L. Calculate the highest wage the rm could offer and still expect to break even (earn zero expected prot). Intermediate Step B: Assuming the rm offers the wage you just calculated in Step A, which workers would accept the job? Intermediate Step C: If the rm understands and believes which workers would accept the job according to your answer in Step B, what is the highest wage the rm could offer and still expect to break even? Intermediate Step D: If the rm offers the wage you just calculated in Step C, which workers would accept the job? Intermediate Step E: If the rm understands which workers would accept the job according to your answer in Step D, what wage will the rm offer and still expect to break even? Would this wage offer be accepted? Your answer to this question is the equilibrium outcome we would expect in this situation. What is the equilibrium wage