BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form. Form Type Mix of Forms Form Cost A 0.5 $3.00 B 0.5 $1.00 The expected cost of digitizing a form is S Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected cost of the form that you calculated in the previous part of the problem. Suppose that after the agreement, the client sends only forms of type A. The expected digitization cost per form of the forms sent by the client is $ BPO. (Hint: Do not round your answers. Enter the loss as a positive number.) This leads to an expected loss of S per form for
BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form. Form Type Mix of Forms Form Cost A 0.5 $3.00 B 0.5 $1.00 The expected cost of digitizing a form is S Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected cost of the form that you calculated in the previous part of the problem. Suppose that after the agreement, the client sends only forms of type A. The expected digitization cost per form of the forms sent by the client is $ BPO. (Hint: Do not round your answers. Enter the loss as a positive number.) This leads to an expected loss of S per form for
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter20: The Problem Of Adverse Selection Moral Hazard
Section: Chapter Questions
Problem 20.5IP
Question
check the answer and add explanation properly at every steps and solve steps wise
![BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the
forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form.
Form Type
Mix of Forms Form Cost
A
0.5
$3.00
B
0.5
$1.00
The expected cost of digitizing a form is S
Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected
cost of the form that you calculated in the previous part of the problem.
Suppose that after the agreement, the client sends only forms of type A.
The expected digitization cost per form of the forms sent by the client is $
BPO. (Hint: Do not round your answers. Enter the loss as a positive number.)
This leads to an expected loss of S
per form for](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F00759166-e117-435c-af73-28818eaef7b5%2Fb7d1c718-4af8-4a22-a029-0685e22e4744%2Fhszs8h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the
forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form.
Form Type
Mix of Forms Form Cost
A
0.5
$3.00
B
0.5
$1.00
The expected cost of digitizing a form is S
Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected
cost of the form that you calculated in the previous part of the problem.
Suppose that after the agreement, the client sends only forms of type A.
The expected digitization cost per form of the forms sent by the client is $
BPO. (Hint: Do not round your answers. Enter the loss as a positive number.)
This leads to an expected loss of S
per form for
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