1a. The incentive contract plan that the CEO of General Motors could take would be to use business practices or tactics to earn the greatest profit under the prevailing market conditions. One of these practices could be strategic decisions. This is business actions taken to alter market conditions that increase and protect the strategic firm's profit. Long-run profitability could come from having few substitutes or abundant complementary products.
1b. If these strategic decisions do not perform you could use opportunity cost to criticize the incentive contract plan. If the company gives up a resource to produce a certain good or service.
2a. Suppose general supply function is: Qs= 100 +20P-10P1 +20F. $100 for price of an important input for cost for P1 and 30 banks (firms) in the industry selling bonds.
Supply Schedule for supply function: Qs=-300+20p
Price Quantity Supplied
The shift would be a supply curve
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