Question
Solid Numbers, Inc. is an accounting firm organized as a partnership. There are 3 accountants. Each worker has time endowment T = 30. Time can
Solid Numbers, Inc. is an accounting firm organized as a partnership. There are 3 accountants. Each worker has time endowment T = 30. Time can be spent as leisure (x) or effort (e). Solid Number's profit function is = 12(1 + 2 + 3), where denotes worker 's effort. Worker 's utility function is given by = , where denotes his income.
a. What is each worker's leisure, effort, income and utility in the fair and efficient outcome?
b. What is each partner's leisure, effort, income and utility in the partnership equilibrium? (You can assume symmetry in equilibrium.
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