between an breach of a contract is economically efficient. expectation at the level that leaves the promisee indifferent Thinking about the economic theory of contracts, explain why setting
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- Suppose that Lionel Messi is negotiating a contract with FC Barcelona. Messi has an offer from Real Madrid for $20 million a year. If he signs with FC Barcelona, they will earn $90 million in revenue from the signing. FC Barcelona's next best option is to sign Cristiano Ronaldo. They would earn $70 million from signing Ronaldo and would pay him a contract of $10 million. Messi's bargaining power is w = 1/2. a) What is the negotiated salary between Messi and FC Barcelona under Nash Bargaining? What is Messi's surplus and what is FC Barcelona's surplus? b) Due to an injury, FC Barcelona would only earn $50 million from signing Ronaldo but everything else remains the same. What is the negotiated salary between Messi and FC Barcelona under Nash Bargaining? What is Messi's surplus and what is FC Barcelona's surplus?a. Explain why the frail-type indifference curve pictured, UF, is not a valid indifference curve.b Draw your own version of this figure and label two contracts, A and B. Draw the two contracts such that:• contract A is strictly better than B, with more income in both states of the world, and• the customer with the pictured indifference curve nonetheless prefers contract B to contract A.What do you mean by ‘Information Rent’ in contract design? If agents are boundedly self-interested (i.e., they have social preferences), instead of self-interested, what would happen to the volume of information rent and why? Explain with an example.
- Define consideration. Can consideration be illegal for a binding contract? Can consideration be modified in a contract? Is that ethical?22) Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F * C. Derive the contract curve. 23) Robinson starts out with 10 lobsters and 5 coconuts. Friday starts out with 10 lobsters and 15 coconuts. After trading, Robinson ends up with 8 lobsters and 10 coconuts. Robinson feels neither better nor worse off than when he started but cannot get Friday to agree to any more trades. Friday feels better off than when he started. Draw the Edgeworth box consistent with this story.Consider the following bargaining problem: $20 dollars needs to be split between Jack and Jill. Jill gets to make an initial offer. Jack then gets to respond by either accepting Jill’s initial offer or offering a counter offer. Finally, Jill can respond by either accepting Jakes offer or making a final offer. If Jake does not accept Jill’s final offer both Jack and Jill get nothing. Jack discounts the future at 10% (i.e. future earnings are with 10% less than current earnings while Jill discounts the future at 20%. Calculate the Nash equilibrium of this bargaining problem. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Is the dynamics of the Law of Contract as per the civil code a myth with relation to a business entityDecide whether that sentence is true or false? The validity of the contract completely depends on the form of contract. Contract for the benefit of a third party is a contract which is concluded by three parties and the third party shall enjoy benefits from the performance of such obligations; Time of entry into civil contract shall be the time when the offeree‘s letter of acceptance was posted In cases where a third party refuses to enjoy its benefits from a contract for the benefits of a third party, the contract shall still take effect toward the contracting parties. When the individual entering into the contract dies, such contract shall terminate, unless otherwise agreed upon by parties. When the object of the contract does not longer exist, it does not lead to the termination of the contract, unless the object of the contract is a distinctive object. A pledge of property shall take effect as from the time at which the last party signs the document of pledge of…Suppose that the marginal benefit of writing a contract is $125 and the marginal cost of that contract is $100. Based on this information, the optimal contract length should a. be decreased by half. b. be increased. c. be held constant at the contract length where MB = 125 and MC = 100. d. be decreased by two-thirds.
- What is the difference between a goods contract (e.g., retail) from a forward contract? a.The parties pay money at the start for a forward contract but not under a goods contract. b.Under a forward contract neither party pays any money at the start of the contract, but not under a goods contract. c.Under a goods contract neither party pays any money at the start of the contract, but not under a forward contract. d.Under a forward contract and goods contract, neither party pays any money at the start of the contract.Forward contracts are: a. Contracts usually involving the exchange of a commodity or financial instrument. b. Easily resold c. Always standardized d. An agreement between more than two partiesState the general rule with respect to effectivity of contracts. What are the exceptions, if any. Explain your answer with legal basis from the Philippine Civil Code.