Assume That There Are Two Types of Workers: Safe and Risky.At

question 22

Multiple Choice

Assume that there are two types of workers: safe and risky.At the beginning of the first period a firm must decide to hire a safe or risky worker.Safe workers have constant ability worth $200 per period.There is a 50 percent chance a risky worker will have ability worth $300 per period and a 50 percent chance a risky worker will have ability worth $100 per period.Safe workers can be hired for a per-period wage of $190 and risky workers can be hired for a per-period wage of $210.What are the firm's profits if it hires a safe worker?

• A) $5
• B) $10
• C) $20
• D) $30
• E) $50

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Definitions:

Ultra Vires Doctrine

A principle stating that acts performed beyond the powers or authority granted by law or under a corporate charter are void or voidable.

Authorized Conduct

Actions or behaviors that are officially approved or sanctioned by an authoritative entity.

Corporation Statutes

Laws enacted by a legislature that dictate the formation, organization, and governance of corporations.

MBCA

Stands for the Model Business Corporation Act, which is a model set of laws prepared by the Committee on Corporate Laws of the American Bar Association, guiding the governance and regulation of corporations in the United States.