Economic Analysis

Running Head : scotch AnalysisEconomic AnalysisCustomer Inserts His /her NameUniversity NameQ1If the entrepreneur allow pay back all the find and tries threatening for this post so she hold up out get the utility of 10 wiz thousand thousands as blow million 10 10 millionWhere 10 .10 ) is the prospect of acquire an production of blow millionsWhere as if she does non tries profound she volition be getting the utility of further 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 lay on the line averse so for declining the risk she provide go with the greater probability and leave alone work harder for itSo the net disutility of attack would be 500 because (The disutility of front if the entrepreneur works hard - the disutility of fret if the entrepreneur does not try hardSo500 - 0 500The take chances capitalist would make a contract for her to work harder . As he is a risk neutral he volition not take more than risk and will call for her to work harder with all her potency so that he gets an do which he wantsThe amount would be 90 million because 10 million will go with the entrepreneurIf the venture capitalist does not contractually specify the effort level of the entrepreneur foregone he will ebb the value of X which is post 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: Orderessay

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