Unsurprisingly, managers supply more effort, at given q, if they place greater
weight on the administration cost relative to their effort cost. More productive
managers, who have smaller marginal costs of effective effort, also supply a
greater amount of effective effort, though they may put in fewer nominal hours.
Although increases in q or x increase administration costs, their effect on effort
depends on whether they increase the cost-reducing effects of additional effort.
Alternatively, since C sC and C sC , effort increases with these variables aq qa ax xa
if it reduces their marginal cost