ECO 550 Week 7 Chapter QuestionsClick this link to get the tutorial:http://homeworkfox.com/tutorials/economics/4282/eco-55...
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Eco 550 week 7 chapter questions

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Eco 550 week 7 chapter questions

  1. 1. ECO 550 Week 7 Chapter QuestionsClick this link to get the tutorial:http://homeworkfox.com/tutorials/economics/4282/eco-550-week-7-chapter-questions/Week 7 Chapter 11 Question 11. Why does the assumption of independence of risks matter in the examples of insurance?What would happen to premiums if the probabilities of houses burning were positivelycorrelated? Can you think of a situation where they might be negatively correlated?Week 7 Chapter 11 Question 14Small firms can discover the abilities of their workers more quickly than large onesbecause they can observe the workers more closely at a variety of tasks. Does it then makesense for people with high abilities to go to small firms? Give some reasons why and somereasons why not.Week 7 Chapter 12 Question 44. In some ways monitoring is easier in a partnership than a corporation, whereshareholders monitor directors. In what ways is monitoring easier? In what ways is itnot?Week 7 Chapter 12 Question 1111. A friend convinces you that she has a great idea for a business, and the two of youincorporate. You supply her with funds and let her make all of the executive decisions.Under the agreement you hold 30 percent of the firm’s stock and your friend holds 70percent. Why should you ever put yourself into a position where your friend’s decision willcarry the day, whether you agree with her or not? What does this tell you about problemsthat allegedly stem from separation of ownership and control?

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