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Question 35: [Show your work] Eye-Kya hires one worker to produce chairs. Let Q be the number of chairs pro- duced. The worker is able
Question 35: [Show your work] Eye-Kya hires one worker to produce chairs. Let Q be the number of chairs pro- duced. The worker is able to produce chairs according to the following production func- tion: Q = 3e} where the variable 6 represents the effort of the worker. For the worker, his personal cost of exerting effort is simply Effort cost = 382. Eye-Kya is able to sell each chair Q at a price P = 10. The worker receives from Eye-Kya a pay ment equal to X% of the revenue of the rm. For example, if m = 0.40, then the worker re- ceives 40% of the revenue of the rm. The worker's utility equals his income minus his effort cost. The worker chooses the effort that maximizes his utility. Find the worker's op- timal effort choice. (A) e* = 53: (B) e* : 43: (C) 6* = 23: (D) e* = as (E) 6* = 33
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