I’m trying to study for my Writing course and I need some help to understand this question.
1. Oscar’s Outdoor Signage employs salesmen to find new advertisers for existing signs. In an average month, salaried sales staff can keep 80 of 100 signs under contract in a given month. When Oscar experimented with a bonus of $100 for each sign under contract this was increased to 90 of 100 signs. How large must the contribution margin on a sign be to make it profitable to offer the bonuses?
2. A common complaint is that a new car will depreciate by 25% as soon as the new owner drives it off the lot. This information comes from resale price data from cars sold just months after the initial purchase. How does adverse selection imply that most cars depreciate much less?
3. What are the potential moral hazards involved when pharmaceutical firms advertise in medical journals or food companies offer advice on healthy eating? What should be done about these?
Your work should be 2+ pages long and consist of your own material.