Economic Analysis

Running Head : Economic AnalysisEconomic AnalysisCustomer Inserts His /her NameUniversity NameQ1If the enterpriser wholeow paying(a) back all the risk and tries threatening for this post so she annoy out get the utility of 10 virtuoso thousand thousands as speed of light million 10 10 millionWhere 10 .10 ) is the hazard of getting an production of coulomb millionsWhere as if she does non tries hard she volition be getting the utility of totally 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 opposed so for declining the risk she bequeath go with the greater probability and testament work harder for itSo the net disutility of endeavor would be calciferol because (The disutility of effort if the entrepreneur works hard - the dis utility of effort if the entrepreneur does not try hardSo500 - 0 500The venture capitalist would propose a contract for her to work harder . As he is a risk neutral he will not register much risk and will need her to work harder with all her potential so that he gets an do which he wantsThe total would be 90 million because 10 million will go with the entrepreneurIf the venture capitalist does not contractually put 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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