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kotykmax [81]
3 years ago
6

An elderly physician has built up his own practice into a quite valuable business. Now that he is thinking of retiring, he wants

to take on a partner to learn the business and eventually buy the practice in three years. Her compensation will be a salary plus 25% of the profits if they are below the historical average and 50% for any increase above the historical average. The eventual purchase price for the practice will be 5 times the average profits over the three years. Discuss the efficiency aspects of such a contract. Are the incentives of the buyer and seller aligned?
Business
1 answer:
inn [45]3 years ago
7 0

Answer:

No

Explanation:

Tehe Overlapping tenure for the retiring and new physicians tends to increase the transfer of practice specific knowledge.  The profit sharing with the new physician increases her incentives to maximize profits but since the sale price is a multiple of the profits during this 3 year, the new physician has an incentive to shirk to keep the profits low. it would be better to use a multiple of profits from the period before she began this probation.

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By definition, empirical probability is equal to C. Number of successful trials/Total number of trials.

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If the nominal exchange rate between the US dollar and the Canadian dollar is C $ 0.89 to the US dollar, how many dollars is req
Olin [163]

Answer:

1) 2.8 USD

2)There are several methods:

1) Modifying Reserve Requirements

2) Changing Short-Term Interest Rates

3) Conducting Open Market Operations

Explanation:

I) First of all, the nominal exchange rate describes how much foreign currency can be exchanged for a unit of domestic currency, but the real exchange rate indicates how much the goods and services in the domestic country can be exchanged for the goods and services in a foreign country.

If 1USD=0.89CAD, then 1 CAD=1/0.89=1.12USD

Then 2.5 CAD = 2.5*1.12= 2.8 USD so we will need 2.8 USD to get 2.5 CAD.

II) As we know, the movement of the money supply is the responsibility of the monetary policy activities by central banks. There are several methods:

1) Modifying Reserve Requirements: means that it is possible to influence by modifying the reserve requirements to increase or decrease the money supply. More deeply, this modification refers to the amount of funds banks have to keep against deposits in bank accounts. By lowering the reserve requirements, banks are able to loan more money, which grow the overall supply of money in the economy. Conversely, by increasing the banks' reserve requirements, it will be possible to decrease the size of the money supply.

2) Changing Short-Term Interest Rates: means that it is possible to change the interest rates in short terms to alter the money supply. It’s all about the changing the discount rates. By lowering the rates, it is possible increase the money supply and boost economic activity.  

3) Conducting Open Market Operations: means that it is possible to increase or decrease the money supply conducting open market operations, which affects the funds rate. So the authority who deals with the monetary policy buys and sells government securities in the open market. If the authority wants to increase the money supply, it will purchase government bonds as a result this supplies the securities dealers who sell the bonds with cash, increasing the overall money supply. However, if the authority wants to decrease the money supply, it will send bonds from its account, thus taking in cash and removing money from the economic system as a result, adjusting the funds rate is a heavily anticipated economic event.

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3 years ago
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Vitek1552 [10]

Answer:

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3 years ago
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