Contracting: agent indifference curves. An agent has production costs given by:C(q) = 10 · q
The agent is risk-neutral so his utility from accepting a payment t to produce q unitsis:UA = t - C(q)
Do the following:(a) For each of the contracts listed below, compute the agent's utility under thecontract. Identify whether the agent will accept or reject the contract.
i. q = 8, t = 80
ii. q = 8, t = 120
iii. q = 12, t = 120
iv. q = 12, t = 80
(b) On a set of axes with q on the horizontal axis and t on the vertical axis, plot each of the contracts above and draw the corresponding indifference curves. Clearly label the region in which no contract offers will be accepted.