Problem 1: Your supervisor recently instituted a plan that encourages her managers to share non-private demographic characteristics voluntarily provided by those who purchase your firm's final product. Since the plan was implemented, the same amount of voluntary information is being collected by each manager, however, the supervisor is surprised to find that less information in total is available than before the plan was instituted. What is likely causing the plan to fail? Explain using our material.
Problem 2: The Kansas Board of Public Utilities is a privately owned company that is the sole supplier of water to Kansas City, KS. The owner of the firm has provided the manager of the company an incentive to maximize the firm's profits, and the manager is currently selling 100,000 gallons of water per week at a price of $.05 per gallon. The marginal cost of water is zero, but the firm's average cost of this level of output is $.01 per gallon. Calculate the company's profits, and show your calculations.