Author Question: Suppose that Jesse Eisenberg had been offered a bigger and better part in another movie and that to ... (Read 37 times)

Pea0909berry · **on:** Jun 29, 2018

Suppose that Jesse Eisenberg had been offered a bigger and better part in another movie and that to hire him for The Social Network, the producer had to double Jesse's pay.

What incentives would have changed? How might the changed incentives have changed the choices that people made?

Question 2

If marginal product is a constant what can we conclude about the shape of the average product function and why?

What will be an ideal response?

ghepp · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The higher pay would have increased Mr. Eisenberg's incentive to make The Social Network rather than the other movie and perhaps affected his choice to make The Social Network rather than the other movie. The higher pay would have increased the incentive of the producer to decrease the expense of other aspects of the movie so the producer might have chosen to reduce the pay of the other stars in the movie.

Answer to Question 2

The average product function will be horizontal. Since the marginal product stays the same the average product will never change.