Since a0 )0 and a0 -0 we see that if additional effort reduces the marginal b1 2 b
cost of quality, then quality decreases with b but may increase or fall with b . 2 1
Increases in the effort parameter b reduce effort and this increases the marginal 2
cost of quality, thereby reducing its optimal level. However, although increases in
b increase the value of cost reductions, increase effort and reduce the marginal 1
cost of quality, this effect is counteracted by the fact that increases in quality are
costly and a greater weight is attached to such increases.