Question
If U(w)=w^1/2, wh=100 and wl=36. Let the reservation utility be 7. Further, let p=1/2. Calculate the maximum cost of effort for which the tenant is
If U(w)=w^1/2, wh=100 and wl=36. Let the reservation utility be 7. Further, let p=1/2. Calculate the maximum cost of effort for which the tenant is willing to accept the contract. Further, if the intercept of the ICC is 14, calculate the probability of obtaining the low output when no effort is exerted.
Question options:
(0,1), 14
2, 3/7
1, 4/7
<1, 4/7
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Microeconomics
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
2nd edition
1464187029, 978-1464189104, 1464189102, 978-0716759751, 716759756, 978-1464187025
