You inherited your uncle's bakery in a rem family, but you prefer to keep your job and hired a local manager. The profits of the bakery depend on the economy and on the manager's effort, according to the following table: Good economy Bad economy No effort $22,000 $7,000 High effort $32,000 $17,000 The good and bad economies have equal probabilities. When the manager makes no effort, he is running his own side business that is generating $1,500. Which of the following incentives avoids the principal-agent problem? O A. 7% of the profit O B. A fixed salary of $3,000 O C. None of the listed options. O D. 14% of the profit
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- Economics A person likes to gamble and has $100 on him. He is going to play the following game: if he bets $b, then with probability p, 0 < p< 1, he will win $b; with probability 1 – p, he will lose his $b. He is given the opportunity to play at most 20 times. He is a very disciplined gambler and is going to use the following strategy: • Every time he plays, he will make a bet equal to half of the amount of money he has at that moment. • If the amount of money he has gets to $300 or higher, then he will stop playing. Find the probability that, starting with $100 and given 20 chances to play the game, this person will get to $300 or more. Formulate this problem recursively by writing down the “Bellman equation." What is (are) the state variable(s)? Be specific about any constraints or initial/boundary conditions for this problem.] Suppose that a football team is holding tryouts for various positions. A certain playertries out for both offensive line and defensive line. He ends up making the team as an offensivelineman. However, he is actually better at the defensive position. He is puzzled by this so he asksthe coach to explain. What do you think the coach told the player? Relate this to an economicconcept or concepts we have discussed.dent A boss notices that one of his unscrupulous employees has been stealing company materials lately. He values honesty in himself and his employees, but the stolen property was not valu Consequently, the boss prefers keeping her around rather than having to fire and train a repl Nevertheless, he would ideally like to stop her from stealing. The boss is thinking about issuing a warning: the next person caught stealing any company property will be immediately fired. I Should the boss issue such a warning? (Hint: You need to first find the subgame perfect equilibrium (SPE)) Below is the game in extensive form. The top payoffs belong to the Boss, the bottom payoff belong to the employee. Employee Stop No warning Steal Figure 1: Extensive form of the game Boss Ignore Boss Fire Warning Boss Follow Test Forgive 21 Employee Quit 0
- pls answer this question step by step and explain it. which fomular are u using to solve. pls answer this question fastPlease solve a Suppose that without a seat belt, drivers who travel at 0 m.p.h. (mile per hour) have a 100% chance of staying alive, while drivers who travel at 100 m.p.h. have 0% chance of staying alive. Suppose that with a seat belt, drivers who travel at 0 m.p.h. have a 100% chance of staying alive, drivers who travel at 100 m.p.h. have a 50 % chance of staying alive and drivers who travel at 200 m.p.h. has no chance of staying alive. (a) Suppose a driver prefers more chances of staying alive to less, driving faster than slower. Draw and indifference curve diagram relating safety (measured by chance of staying alive) on the horizontal axis and speed (measured in m.p.h.) on the vertical. Draw the budget constraints of a driver with a seat belt and a driver without a seat belt. (You may assume these constraints are straight lines.) (b) True or False: If speed and safety are both normal goods, then the invention of seat belts will certainly make people drive faster, but might or might…The company that you manage has invested$5 million in developing a new product, butthe development is not quite finished. At arecent meeting, your salespeople report that theintroduction of competing products has reduced theexpected sales of your new product to $3 million. Ifit would cost $1 million to finish development andmake the product, should you go ahead and do so?What is the most that you should pay to completedevelopment?
- A rational decision-maker takes an action only if the Select one: a. average benefit is greater than the average cost O b. marginal benefit is greater than both the average cost and the marginal cost Oc marginal benefit isgreater thanthe.marginal cost O d. marginal benefit is less than the marginal cost age ter4 ELAST CTYAND ITS APPLICATION TAutosaved.12. Do it asap!Briefly explain why quantifying nsk is important to decision making Why is it important to quantity risk when making a decision? OA Quantifying risk is important so it can be measured against the benetits when making decisions appropriate for our own personal crcamstances OB. Quantifying risk is important so it can be measured against the benetts when making decisions idealy the risk wil equal the benefts OC. Quantifying risk is important so it can be measured against the benefits when making decisions ideally the risk will outweigh the benefs OD. Quantifying risk is important so it can be measured across a population and help identity why people make the decisions they do
- Suppose that an incumbent can commit to producing a large quantity of outputbefore the potential entrant decides whether to enter. So, the incumbent Örst chooseswhether to produce a small quantity or a large quantity. The rival then decides whether toenter. If the incumbent commits to the small output level and if the rival does not enter,the rival makes $0 and the incumbent makes $900. If it does enter, the rival makes $125and the incumbent earns $450. If the incumbent commits to producing the large quantity,and the potential entrant stays out of the market, the potential entrant makes $0 and theincumbent makes $800. If the rival enters, the best the entrant can make is $0, the sameamount it would earn if it didnít enter, but the incumbent earns only $400. Show the gametree. What is the SPNE?How were the small business before Covid 19?Scenario: Alex, an entrepreneur, operates a called business "Fitness for Life", providing physical conditioning services (strength, balance, and flexibility training) in his community. Which of the following are the THREE factors that are most likely to have positive impacts on his business? Select ONLY THREE from the given factors. O People in his community have become more health-conscious. O The average education level of the population in his community is low. The average age of the population in his community is high. The local school district has been running a publicity campaign emphasizing the value of exercise. The level of disposable income in his community is low. O The level of unemployment in his community is high. O The mayor of the city where Alex operates is an amateur marathon runner and has stressed the need for "going green" in the community. DA chiropractor and two independent physical therapists are located in his community. O O O O