// LabInfoActionsSpecs. 8/11/2020. import Foundation class LabWorkerInformationActionsSpecs { let strInfoActionsSpecs :String = """ `` Lab Specs // Slider Specs 100 300 50 200 // 0: Prod Function Const 0.1 0.9 0.1 0.5 // 1: Prod Function Labor Exp 1.00 2.50 0.50 2.00 // 2: Price 10.00 90.00 10.00 40.00 // 3: Wage 0 100 1 20 // 4: Labor 0 100 5 0 // 5: Base Shirk Rate (percent) 0 20 1 0 // 6: Incentive Factor 0 24 2 0 // 7: Commission Rate (percent) `` Prob Specs ` Problem 0 Start Screen 1 - Marginal Revenue Product, Profit Maximizing, and Shirking // 0: Title // Slider visibility: Both, LabelOnly, ScrollbarOnly, Neither L L // 1: ProdConst ProdLExp L L B // 2: Price Wage Labor B N N // 3: ShirkBase IncentiveFactor Commission // Output visibility: T: Visible. F: Hidden T F F // 4: Quantity GrossTR ShirkNet T T T // 5: FirmTR FirmTC FirmProfit F F F // 6: SalaryWage SalaryCommission SalaryTotal T T T T // 7: Labor MPPL MRPL MEL T // 8: Search for optimal effort T T T F // 9: Curve visibility: MRPL MEL Point // Slider initial values: D default D D // 10: ProdConst ProdLExp D D D // 11: Price Wage Labor D D D // 12: ShirkBase IncentiveFactor Commission // Graph Specs 0 0 35 70 // 13: Graph specs Labor MRPL,_MCL // 14: Axis names ` Text Start // 15: Dialogue `RED`BLDObjective:`BLD Illustrate how shirking affects the marginal revenue product of labor curve and the profit maximizing quantity of labor.`BLK We begin with the standard marginal revenue product/marginal expense diagram. Using the Labor scrollbar which is located beneath the graph, determine how much labor the profit maximizing firm would hire. Now, focus on the Shirking Rate scrollbar located above. At present, the shirking rate is 0%; workers are not shirking. Gradually increase the shirking rate to 80%. Workers are now shirking; they are now putting forth only 20% of their full effort. Explain why the marginal revenue product curve shifts down. Using the labor scrollbar determine the profit maximizing quantity of labor when the shirking rate is 80%. On the following screens we will investigate how commissions and the resulting incentives affect the labor market. ` Prob End ` Problem 1 Start Screen 2 - Commissions, Incentives, and Shirking // 0: Title // Slider visibility: Both, LabelOnly, ScrollbarOnly, Neither N N // 1: ProdConst ProdLExp N N N // 2: Price Wage Labor L N B // 3: ShirkBase IncentiveFactor Commission // Output visibility: T: Visible. F: Hidden T F T // 4: Quantity GrossTR ShirkNet F F F // 5: FirmTR FirmTC FirmProfit F F F // 6: SalaryWage SalaryCommission SalaryTotal T T F F // 7: Labor MPPL MRPL MEL T // 8: Search for optimal effort F F F T // 9: Curve visibility: MRPL MEL Point Shirking // Slider initial values: D default D D // 10: ProdConst ProdLExp D D D // 11: Price Wage Labor 80.0 15.0 D // 12: ShirkBase IncentiveFactor Commission // Graph Specs 0 0 100 100 // 13: Graph specs Commission_(%) Shirking_(%) // 14: Axis names ` Text Start // 15: Dialogue `RED`BLDObjective:`BLD Explain how commissions provide incentives that reduce shirking.`BLK The window has changed a little. First, a Commission Rate scrollbar appears near the top of the window. The commission rate equals the percent of total gross revenue that workers receive from sales. The default commission rate is 0%. In other words, the firm is not paying its workers a commission presently. Second, we have a new term: Shirking Rate without Commissions. This is the shirking rate when workers have receive no commissions. We have specified an 80% shirking rate without commissions. Third, another new term, Shirking Rate with Commissions. This reflects the effect of commissions on work effort. When workers receive a commission they receive a "piece of the pie," They receive a percent of the sales their efforts generate. A commission provides workers with an incentive to work harder. By working harder they will take home more income. But since the firm is paying no commissions, the shirking rate with commissions is the same as the rate without, 80%. Let's use the lab to illustrate the incentive effect. Initially, the firm pays no commissions and the shirking rate without and with commissions equals 80%. Workers exert only 20% of their full effort. The firm hires 20 units of labor and for now, we assume that it will continue to do so. When the hires 20 workers, it produces 400 units of output. Next, use the Commission Rate scrollbar to increase commissions from 0% to 8%. The shirking rate after accounting for the commissions falls from 80% to 23%. Work effort increases and the firm produces more output. Output rises from 400 to 785 even though the firm is still hiring 20 workers because commissions have led to a decrease in shirking. The marginal physical product of labor rises also from 10.0 to 19.6. ` Prob End ` Problem 2 Start Screen 3 - Commissions and the Marginal Expense of Labor // 0: Title // Slider visibility: Both, LabelOnly, ScrollbarOnly, Neither L L // 1: ProdConst ProdLExp N L N // 2: Price Wage Labor L N B // 3: ShirkBase IncentiveFactor Commission // Output visibility: T: Visible. F: Hidden T F T // 4: Quantity GrossTR ShirkNet F F F // 5: FirmTR FirmTC FirmProfit F F F // 6: SalaryWage SalaryCommission SalaryTotal T T F T // 7: Labor MPPL MRPL MEL T // 8: Search for optimal effort F T T F // 9: Curve visibility: MRPL MEL Point // Slider initial values: D default D D // 10: ProdConst ProdLExp D D D // 11: Price Wage Labor 80.0 15.0 D // 12: ShirkBase IncentiveFactor Commission // Graph Specs 0 0 35 70 // 13: Graph specs Labor MRPL,_MCL // 14: Axis names ` Text Start // 15: Dialogue `RED`BLDObjective:`BLD Illustrate how commissions affect the marginal expense of labor curve.`BLK We have just seen how commissions reduce shirking and thereby increase work effort. Now, we will illustrate how commissions affect the marginal expense of labor curve. Gradually increase the commission rate to 24% by adjusting the Commission Rate scrollbar. The marginal expense curve shifts up. To appreciate why the marginal expense curve shifts up, focus on the equation for the firm's total costs, TC: TC = wL + cPQ where w = Wage L = Observed hours worked c = Commission rate PQ = Gross total revenue The second term, cPQ, is crucial. When commissions rise, two effects come into play. A direct effect and an incentive effect: `0x2022 Direct Effect: c up -> cPQ up `0x2022 Incentive Effect: c up -> Q up -> cPQ up `BLDDirect Effect:`BLD An increase in the commission rate causes the c in the cPQ term to rise. `BLDIncentive Effect:`BLD An increase in the commissions rate provides workers with an incentive to work harder. When employees work harder, the firm produces more output causing the Q in the cPQ term to rise. When the firm hires 20 units of labor, its production increases from 400 to 889 units and its marginal expense of labor rises from $40.00 to $50.66. The direct and incentive effects reinforce each other; both cause the marginal expense curve to rise. ` Prob End ` Problem 3 Start Screen 4 - Marginal Revenue Product, Commissions, and Incentives // 0: Title // Slider visibility: Both, LabelOnly, ScrollbarOnly, Neither L L // 1: ProdConst ProdLExp L N N // 2: Price Wage Labor L N B // 3: ShirkBase IncentiveFactor Commission // Output visibility: T: Visible. F: Hidden T F T // 4: Quantity GrossTR ShirkNet F F F // 5: FirmTR FirmTC FirmProfit F F F // 6: SalaryWage SalaryCommission SalaryTotal T T T F // 7: Labor MPPL MRPL MEL T // 8: Search for optimal effort T F T F // 9: Curve visibility: MRPL MEL Point // Slider initial values: D default D D // 10: ProdConst ProdLExp D D D // 11: Price Wage Labor 80.0 15.0 D // 12: ShirkBase IncentiveFactor Commission // Graph Specs 0 0 35 70 // 13: Graph specs Labor MRPL,_MCL // 14: Axis names ` Text Start // 15: Dialogue `RED`BLDObjective:`BLD Illustrate how commissions affect the marginal revenue product of labor curve.`BLK Focus on the equation for the firm's total revenue, TR: Firm TR = (1-c)PQ where c = Commission rate PQ = Gross total revenue Now, gradually increase the commission rate to 12%. As commission rise, two effects influence the firm's total revenue: `0x2022 Direct Effect: c up -> (1-c)PQ down `0x2022 Incentive Effect: c up -> Q up -> (1-c)PQ up `BLDDirect Effect:`BLD As commissions rise, the firm receives a smaller share of the revenues generated from sales. That is, as commissions rise the (1-c) factor in the (1-c)PQ term decreases. From the firm's perspective, the direct effect has a negative effect. `BLDIncentive Effect:`BLD As commissions rise, incentives lead workers to reduce shirking and work harder. Workers produce more output; the Q in the (1-c)PQ term rises. From the firm's perspective, the incentive effect has a positive effect. When the firm hires 20 units of labor, its production rises from 400 to 840 units, marginal physical product of labor from 10.0 to 21.0, and the firm's marginal revenue product from $20.00 to $36.97. When the commission rate increases from 0% to 12% which effect dominates? Explain. Next, increase the commission rate from 12% to 24%. Which effect now dominates? Explain. `BLDSummary:`BLD As commissions increase, the direct and incentive effects oppose each other. The direct effect has a negative effect tending to shift the marginal revenue product curve down whereas the incentive effect a positive effect tending to shift the curve up. ` Prob End ` Problem 4 Start Screen 5 - Profit Maximization and Commissions // 0: Title // Slider visibility: Both, LabelOnly, ScrollbarOnly, Neither L L // 1: ProdConst ProdLExp L L B // 2: Price Wage Labor L N B // 3: ShirkBase IncentiveFactor Commission // Output visibility: T: Visible. F: Hidden T T T // 4: Quantity GrossTR ShirkNet T T T // 5: FirmTR FirmTC FirmProfit T T T // 6: SalaryWage SalaryCommission SalaryTotal F T T T // 7: Labor MPPL MRPL MEL T // 8: Search for optimal effort T T T F // 9: Curve visibility: MRPL MEL Point // Slider initial values: D default D D // 10: ProdConst ProdLExp D D D // 11: Price Wage Labor 80.0 15.0 D // 12: ShirkBase IncentiveFactor Commission // Graph Specs 0 0 35 70 // 13: Graph specs Labor MRPL,_MCL // 14: Axis names ` Text Start // 15: Dialogue `RED`BLDObjective:`BLD Illustrate how commissions and incentives can reduce shirking and increase the firm's profit.`BLK Recall that as commissions rise the marginal expense of labor curve always shifts up. However, the marginal revenue product of labor curve can shift in either direction because the direct and incentive effects oppose each other. If the incentive effect dominates the direct effect, the marginal revenue product of labor curve shifts up; if the direct effect dominates, the marginal revenue product curve shifts down. Initially, the commission rate is 0%. Using the labor scrollbar, find the firm's profit maximizing quantity of labor. What are the firm's profits? Increase the commission rate to 4%. How is shirking affected? Find the firm's profit maximizing quantity of labor. Does the firm have an incentive to increase commissions from 0% to 4%? Explain. Increase the commission rate to 8% and find the firm's profit maximizing quantity of labor. Does the firm have an incentive to increase commissions from 4% to 8%? Explain. Increase the commission rate to 12% and find the firm's profit maximizing quantity of labor. Does the firm have an incentive to increase commissions from 8% to 12%? Explain. ` Prob End """ } ` Problem Test Start Screen - Test // 0: Title // Slider visibility: Both, LabelOnly, ScrollbarOnly, Neither B B // 1: ProdConst ProdLExp B B B // 2: Price Wage Labor B B B // 3: ShirkBase IncentiveFactor Commission // Output visibility: T: Visible. F: Hidden T T T // 4: Quantity GrossTR ShirkNet T T T // 5: FirmTR FirmTC FirmProfit T T T // 6: SalaryWage SalaryCommission SalaryTotal T T T T // 7: Labor MPPL MRPL MEL T // 8: Search for optimal effort T T T F // 9: Curve visibility: MRPL MEL Point // Slider initial values: D default D D // 10: ProdConst ProdLExp D D D // 11: Price Wage Labor D D D // 12: ShirkBase IncentiveFactor Commission // Graph Specs 0 0 35 70 // 13: Graph specs Labor MRPL,_MCL // 14: Axis names ` Text Start // 15: Dialogue [Insert text for problem 0 here.] ` Prob End