Consider the model of investment under asymmetric information in Section 10.2 of the reading. Suppose that initially the entrepreneur is undertaking the project, and that (1 + r)(1- W) is strictly less than RMAX. Describe how each of the following affects D:
(a) A small increase in W .
(b) A small increase in r.
(c) A small increase in c.
(d) Instead of being distributed uniformly on [0, 2?], the output of the project isdistributed uniformly on[? – b, ? + b], and there is a small increase in b.
(e) Instead of being distributed uniformly on [0, 2?], the output of the project is
distributed uniformly on [b, 2? + b], and there is a small increase in b