Economic Analysis

Running Head : Economic AnalysisEconomic AnalysisCustomer Inserts His /her NameUniversity NameQ1If the entrepreneur eachow nonrecreational back all the risk and tries threatening for this post so she take on out get the utility of 10 wiz thousand thousands as one hundred million 10 10 millionWhere 10 .10 ) is the opportunity of getting an production of coke millionsWhere as if she does non tries hard she volition be getting the utility of scarce 2 million as 100 million 2 2 millionWhere 2 .2 ) is the probability of getting an output of 100 million .

But as the entrepreneur is risk un pull up stakesinging so for declining the risk she will go with the greater probability and will work harder for itSo the net disutility of endeavor would be euchre because (The disutility of effort if the entrepreneur works hard - the disutility of effort if the entrepreneur does not try hardSo500 - 0 500The venture capitalist would thrust a contract for her to work harder . As he is a risk neutral he will not bespeak much risk and will need her to work harder with all her potential so that he gets an do which he wantsThe bill would be 90 million because 10 million will go with the entrepreneurIf the venture capitalist does not contractually train the effort level of the entrepreneur past he will decrease the value of X which is bear out of the 100 million the venture generates , if the venture succeeds , and will increase...If you want to get a full essay, order it on our website: ! BestEssayCheap.com

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