Girard (p. 9-22)

Cooper (p. 23-32)

Kunz-Osborne (p. 33-41)

Coulmas-Law (p.42-46)

Stasio (p. 47-56)

Albert-Valette-Florence (p.57-63)

Zhang-Rauch (p. 64-70)

Alam-Yasin (p. 71-78)

Mattare-Monahan-Shah (p. 79-94)

Nonis-Hudson-Hunt (p. 95-106)

JOURNAL OF LEADERSHIP, ACCOUNTABILITY AND ETHICS

In 2008 a mathematical proof refuting a long-standing principle in microeconomics was developed by the author. That economic principle says that firms, in order to optimize profit, should operate at a volume such that marginal revenue (MR) and marginal cost (MC) equate. The proof shows that, because volume is dependent on a key marginal cost (the rate of incentive pay), a firm’s optimal volume will necessarily be less than where MR = MC. This paper extends the previous proof to assess the impact on a firm’s optimal volume when the declining marginal utility associated with incentive pay is taken into account.