Suppose that the expected value of weekly profits for an ice cream shop, before paying the manager, Amy, is E(pi)equals500plus12e, where e is Amy's weekly overtime hours. Amy is risk-neutral but incurs a cost C(e)equalse squared for working overtime. Thus, total expected surplus is E(S)equalsE(pi)minusC(e). What level of effort maximizes total surplus? The value of overtime that maximizes total surplus is eequals nothing hours. (Enter your response rounded to one decimal place.)
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Suppose that the expected value of weekly profits for an ice cream shop, before paying the manager,...
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