Social entrepreneurs are entrepreneurs who use their talents to advance social causes that are…

Social entrepreneurs are entrepreneurs who use their talents to advance social causes that are typically linked to the provision of some type of public good. Their challenge within the civil society is, in part, to motivate individuals to give sufficient funding to the projects that are being advanced. Aside from lobbying for government aid, we can think of two general ways in which social entrepreneurs might succeed in increasing the funding for their organizations. Both involve marketing — one aimed at increasing the number of individuals who are aware of the public good and thus to increase the donor pool, the other aimed at persuading people that they get something real out of giving to the cause. A: We can then think of the social entrepreneur as using his labor as an input into two different single-input production processes—one aimed at increasing the pool of donors, the other aimed at persuading current donors of the benefits they get from becoming more engaged. (a) Suppose that both production processes have decreasing returns to scale. What does this imply for the marginal revenue product of each production process? (b) If the social entrepreneur allocates his time optimally, how will his marginal revenue product of labor in the two production processes be related to one another? (c) Another way to view the social entrepreneur’s problem is that he has a fixed labor time allotment L that forms a time budget constraint. Graph such a budget constraint, with ℓ1

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