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Question 15 3 pts Annabel manages a small shop owned by A-Mart; the sales revenue of the shop depends on both her effort and how
Question 15 3 pts Annabel manages a small shop owned by A-Mart; the sales revenue of the shop depends on both her effort and how lucky she is. There is a 40% probability that she will be lucky. Both Annabel and A-Mart are risk neutral. The cost to Annabel of exerting high effort is $20 and that of low effort is zero. The following table shows the daily sales revenue of the shop with two different effort levels and two different states of the world. Good luck (4M3). Bad Luck (60%) Low effort 100 50 High effort 300 100 Q lfAnnabel rents the shop for $200 from A-Mart, then Annabel and A-Mart share the nancial risk. 0 All of these responses are true. 0 lfAnnabel is offered 15% of the revenue, then Annabel and A-Mart share the nancial risk. Q) A prot sharing contract always provides incentives to Annabel to exert high effort
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