Selected Answer:

	Required compensation
Widgets Sold	Disutility of effort (total, not marginal)
0	$0
1	$40
2	$222
3	$495
4	$860
5	$1'250
6	$1'750
7	$2'388
8	$3'117
9	$3'937
10	$4'849

Suppose that p (the price of the widget on the market) rises to $7,200.

The optimal incentive intensity is_______ in the case in which p=$7,000

Answers:

• higher than
• lower than
• the same as

My incorrect answer was "lower than