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!
This is a problem on adverse selection in credit markets. The assumptions are the following. Suppose 50% of the borrowers are "safe" (meaning theyinvest in safe projects) and 50% of the borrowers are "risky" (meaning they invest in risky projects). The safe project gives a return of 140 with probability 100%. The risky project gives a return of 300 with probability 50% and a return of zero with probability 50%. The size of the loan is 100 and the entrepreneurs (borrowers) need to borrow the whole 100. The bank wantsto break even (make zero profits). There is limited liability for borrowers.
Imperfect information. Suppose the lender (bank) cannot recognize which loans are safe. The lender knows that there are two types of borrowers/projects and that 50% of the borrowers are safe and 50% of the borrowers are risky. However, the bank cannottell if a borrower has a safe or risky project.What is the minimum interest rate the bank should charge if the bank wants to break even?
This document contains various important questions and their appropriate answers in the subject field of Economics.
Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.
Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..
Explain each of the following using supply and demand diagrams, With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.
The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.
Draw the production possibility curve and a. Define consumer surplus and producer surplus.
The Australian government administers two programs that affect the market for cigarettes
How many tickets to sell to maximize total welfare.
The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled
Depict the von Neumann-Morgenstern utility index u in a diagram
What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution
Calculate gross national product and net national product
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