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Business, 17.10.2019 01:10 Tyrant4life

Let’s assume that nice company wants to hire shady tax advisory company to research a complicated tax matter. nice company’s marginal benefit (mb) for hours of tax research is: mb = $200 - $2 h, where h is the hours of tax research provided per week. shady’s marginal cost (mc) for providing additional hours of tax research is $100 per hour: mc = $100 if there is no agency conflict, how many hours of tax research should nice company purchase from shady company? how much surplus does this transaction generate? assuming that nice pays shady $6,225 for the optimal amount of tax research hours, how much of the surplus will nice and shady each receive?

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