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Author Question: If the utility for two goods x and y can be measured as U = y, then it can be concluded that A) x ... (Read 55 times)

Sufayan.ah

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on: Jul 1, 2018
If the utility for two goods x and y can be measured as U = y, then it can be concluded that
 
  A) x and y are perfect complements.
  B) x is a bad.
  C) the indifference curves on the x,y graph are upward sloping where x is measured on the horizontal axis.
  D) the indifference curves on the x,y graph are horizontal where x is measured on the horizontal axis.

Question 2

Explain how more than one possible state of nature affects contract choices.
 
  What will be an ideal response?


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Viet Thy

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Reply #1 on: Jul 1, 2018
Answer to Question 1

D

Answer to Question 2

The uncertainty of the state of nature introduces the risk of random events. This forces principals and agents to incorporate efficiency of risk bearing into contracts.


Sufayan.ah

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Reply #2 on: Jul 1, 2018
Thank you :)


Viet Thy

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Reply #3 on: Jul 1, 2018
Happy to help you


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