Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Problem
Consider an economy with risk neutral individuals. There is a borrower who wants to run a project with a required investment of $100. If the borrower puts enough effort into her project, she will succeed with probability 0.9 and get a gross revenue of y = $150. Otherwise, she fails and gets nothing. But if the borrower's effort level is low, the probability that she will obtain the gross revenue y = $150 is only 0.75. Effort is costly for the borrower, costing c = $18. The bank's gross cost of lending is $115. Assume that the lender just wants to break even, and that the borrower cannot repay more than her current income. a. Show that investment in this case is socially efficient only if the borrower puts forth an "adequate" level of effort.
a. Compute the threshold interest rate (the maximum rate) that the lender can charge to induce an adequate effort level from the borrower.
b. Will the borrower be able to obtain the required funds from the lender? (Assume that the opportunity cost for the borrower is zero.)
c. Briefly explain the main insights gained from this ex ante moral hazard exercise for the particular case of microfinance institutions.
what is the definition of price elasticity of demand? what is the relationship between price elasticity of demand and
What could happen if the government seeks to collect higher taxes by increasing capital gains tax rates?
1.using significant five items or artefacts held by the museum of london write a history of the london economy from
Determine the possible circumstances under which the company should discontinue operations - Analyze the major short run and long cost functions for the low-calorie, frozen microwaveable food company given the cost functions.
the multiplier effect means that a given change in autonomous expenditures answer a. will change equilibrium income by
If a poor nation must choose between building an airport, some schools, or a steel plant, which one should it choose? Why?
Take daily notes on the behaviors and focus specifically on behaviors have to do with your selected stage. Does it seem like the behaviors align well with the theory?
What impact would this have on the Kitty Litter market and the individual Kitty Litter producer in the SR? In the LR? Carefully Explain.
Explain why the fish left behind are a type of investment. Some opponents of property rights in fish have argued against ownership because the fish already.
Calculate the marginal revenue product given this information and how many real estate agents will the manger hire if the wage rate is $32,000? Why?
consider a country called hitech where new arrangements for making payments such as credit cards and atms have been
What is the lowest price firms will sell their goods at in the long run? In other words, what is the long-run industry supply curve? Explain - In this context, would Susan be better off if the government simply gives her cash (which she can spend ..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd