448s05x2 - ECONOMICS 448 Exam 2 Spring 2005 NAME PLEDGE You...

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ECONOMICS 448 Exam 2 Spring 2005 NAME:________________________________ PLEDGE: ______________________________ You have one hour to complete this exam. You may take it in any open classroom in Quigley Hall, but you may not leave Quigley. You may not consult your notes, book, or classmates. The points awarded for each question should be correlated with the length of your answer. Please finish your answers on the back page if you need more space. 1. (17) Williamson claimed that ex post opportunism is an important impetus for integration. How do Milgrom and Roberts disagree?
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2. (25) A drug company hires a researcher to research a new drug. The researcher can at most discover one new marketable drug. If she works hard, there is a 60% chance of success and a 40% chance of failure. If she goofs off there is a 20% chance of success and an 80% chance of failure. A new drug generates $100,000 in revenues to the firm, while failure to create a new drug generates $0 in revenue. The researcher’s utility function is: U(w, a) = w – a, where “w” is wage and “a” is effort. The disutility
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This test prep was uploaded on 04/22/2008 for the course ECON 448 taught by Professor Nonnenmacher during the Fall '07 term at Allegheny.

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448s05x2 - ECONOMICS 448 Exam 2 Spring 2005 NAME PLEDGE You...

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