Q: series of 10 end of year deposits is made that begins with $6500 at the end of year 1 and decreases…
A: Present worth represents the current value of a future amount of money, considering the time value…
Q: Show how each of the following would affect the U.S. balance of payments. Include a description of…
A: The balance of payments (BOP) is the method countries use to monitor all international monetary…
Q: The change from E0 to E1 is caused by
A: The AD-AS framework, or Aggregate Demand-Aggregate Supply framework, is a model used in…
Q: 4) Alternatives bellowed are under consideration by a shopping mall. The interest rate is 15% per…
A: Annual Worth analysis refers to the method in which the discounted annual worth of all the cash…
Q: Supply, Demand, and Elasticity Briefly summarize recent trends in demand on both your company and…
A: The soft drink industry, over the last few decades, has grown tremendously in North America, and…
Q: Keynesian expenditure multiplier assumes that individuals will take stimulus money and ________…
A: The Keynesian expenditure multiplier shows the impact that autonomous spending will have on total…
Q: Is going international something that only large and established firms should pursue after they…
A: Going global is not just advantageous for big, established companies; tiny, startup businesses can…
Q: What is the doughnut economy model? What are their main propositions? Evaluate its relationship with…
A: Environmental economics is important right now because it tackles the financial consequences of…
Q: Give typing answer with explanation and conclusion In Engineering Economical Analysis NPW = Net…
A: In engineering economic analysis, NPW stands for Net Present Worth or Net Present Value. It is a…
Q: Real interest rate, r MP OA remain at point X; remain at point B OB. remain at point X, move to…
A: Phillips Curve describes how inflation depends on output.An IS Curve describes how output depends…
Q: Which of the following statements is true? A depression is a mild and relatively brief…
A: The business cycle refers to the fluctuation in monetary activity that happens after some time. It…
Q: Calculate the conventional benefit-cost ratio for the alternative: Initial Investment 250000…
A: The conventional benefit-cost ratio (BCR) is a financial metric used to evaluate the profitability…
Q: Explain the difference between saving and investment as defined by macroeconomist. Which of the…
A: In macroeconomics, saving and funding are distinct concepts with unique implications.
Q: now that the gover yed by all market 11 narket is equ
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Given: (q is number of items) Demand function: d(q) = 743.6 – 0.6q² Supply function: s(q) = 0.5q²…
A: An individual’s willingness to pay for each unit of the quantity he or she wishes to consume is…
Q: How do you analyze how Publix oligopolies position themselves to be successful?
A: Analyzing how public oligopolies position themselves for success involves assessing various factors…
Q: Figure 5 below represents two different shifts that occurs in the market for potato chips. All of…
A: Supply and demand are important ideas in microeconomics because they determine the market's…
Q: A decrease in the price level will result in an upward movement along the consumption function. O…
A: The consumption function is an economic concept that represents the relationship between consumption…
Q: In a Godiva shop, 40% of the cookies are plain truffles, 20% are black truffles, 10% are cherry…
A: In economics, probability alludes to the chance of a particular occasion or outcome occurring in a…
Q: 1. Uses appropriate statistical methods or economic frameworks to enhance the analysis on global…
A: Poverty is a perplexing and multidimensional condition described by an absence of fundamental assets…
Q: A) What is the size of the labor force? B) What is the official unemployment rate (U3) (Number-NOT…
A: (According to Bartleby guidelines we are allowed to answer only 1 question at a time, it is…
Q: 1. Consider a firm with the following cost and inverse demand functions. Cost($) 20 9 3 Cost…
A: Answering first 3 parts as per guidelines.Average Cost is defined as total cost per unit of output.…
Q: Consider the given graphic: The change in the macroeconomic balance was caused by: O Increased…
A: In the given figure, OA and DA are the…
Q: General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a…
A: Elasticity of demand is a measure of how sensitive the quantity demanded of a good or service is to…
Q: Give only typing answer with explanation and conclusion to all parts In the lectures, we dealt in…
A: Environmental economics matters at present due to the fact that it addresses the financial effects…
Q: how do you explain the fact that in some countries there is widespread political support for…
A: Expropriation is an act in which a government seizes privately owned property or assets without the…
Q: a. How might fears of a zero lower bound justify such a policy, even if the economy was not actually…
A: Given:In 2003, as the U.S. economy finally seemed poised to exit its ongoing recession, the Fed…
Q: Suppose that banks are less able to raise funds and so lend less. Consequently, because people and…
A: Monetary policy refers to the collection of policies that the central bank of a country uses to…
Q: Consider the preferences represented by the following indifference curves. These preferences are…
A: A graphical representation depicting the various combinations of two goods or commodities that a…
Q: Ci and Yi are consumption and income at period i (i=1, 2). When the world interest rate is r…
A: Utility, in economics, refers to the satisfaction or happiness derived by an individual from…
Q: What is the price, current yield and YTM? What is the market interest rate drops to 4% right after…
A: This question is about bond valuation and the relationship between bond prices, interest rates, and…
Q: The following graph shows the domestic demand for and supply of maize in Bolivia. The world price…
A: International trade refers to the exchange of goods, services, human capital, and technology across…
Q: If the demand function for math self-help videos is given by 45 - 0.4x, and the total cost function…
A: Demand Function for math self-help videos can be written as:P = 45 - 0.4x , where P is the price ,…
Q: This graph shows the cost and revenue curves faced by a monopoly. Q P3 P2 P1 PO Q1 Using the graph,…
A: The condition for Equilibrium under Monopoly is similar to Equilibrium under Perfect competition,…
Q: (1) an increase in the saving rate and (2) an increase in technology on output per person during the…
A: The Solow growth model explains the growth rate of economy over the long run. It explains why some…
Q: Choose a product or service that you are familiar with (something you use or have used, something…
A: Market Structure refers to the setup through which the buyers and sellers interact for the exchange…
Q: Opening this economy to trade would benefit and harm
A: Opening an economy to trade means that a nation is willing to engage in unrestricted trade and…
Q: what is the expected rate of inflation?
A: The Short Run Phillips Curve is a graphical representation of the inverse relationship between…
Q: In an oil importing country a permanent fall in oil prices shifts the is curve to the right shifts…
A: The IS-LM-FE relationship is a framework used in macroeconomics to analyze the interaction between…
Q: 0 2 3 7 . IC MC TVC AVC ATC PRICE TR MR PROFIT 12 14 10 14 19 23 32 Complete the above table and…
A: Perfect competition is a market structure in which there are numerous buyers and sellers, and no…
Q: What is the maximum level of education the H-types will choose to get in any separating equilibrium?
A: This question is about a concept in economics called signaling.Signaling refers to the idea that one…
Q: Suppose an economy has a price index at 15, real GDP of $11.09 trillion, and a money supply (M2) of…
A: The velocity of money refers to the hand-changing power of money in the economy. In simple words,…
Q: What do you understand by the development model of Arthur Lewis?
A: The development mode of Arthur Lewis is known as the "Lewis Model" or "Lewis dual sector model". It…
Q: -onsider the following data (all values are in billions of dollars): Currency Checkable deposits…
A: The required reserve ratio of a bank depicts the minimum amount of deposits a bank must keep as…
Q: State and explain briefly 2 differences between a perfectly competitive market and a monopolistic…
A: There are several market structures in an economy; and these market structures reflect the degree of…
Q: Consider the market for some product X that is represented in the Kdemand-and-supply diagram For…
A: The government's intervention or regulation of prices in the economy to influence and control the…
Q: If firm 1 and firm 2 are the oligopolistic firms in bottled spring water production in Nomansland.…
A: Cournot Duopoly model: This is an oligopoly model where 2 firms compete in the market. Here both…
Q: 3. A Tennis Club has asked you to devise a profit-maximizing pricing strategy. It is known that a…
A: Under a monopoly, a single seller faces the entire market demand on his own. Here, the seller…
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Annual worth (AW) is a financial metric used to evaluate and compare the costs or benefits of…
Q: Consider a simple economy that produces only three products: hot dogs, torches and golf balls. Use…
A: CPI refers to the total expenditure made in a particular year by the consumers of the economy.It can…
(a) For what values of γ is the utility function well behaved? (i.e. U′ > 0 and U′′ < 0)
(b) Derive an expression for the stochastic discount factor mt+1?
(c)What are the prices q0s1and q0s2 of complex securities s1 and s2 at t = 0?
d) What weights create Arrow-Debreu securities? (hint: What are the weights of the complex
securities that create payoffs (1, 0)′ and (0, 1)′?)
(e) What are the state prices q1 and q2? (hint: State prices are a function of prices from part
c) and the the inverse of the payoff matrix from part d).)
(f) What is the price of a risk free bond qb?
(g) What are the risk neutral probabilities π1RN and π2RN ?
(h) Using the risk neutral probabilities solve for qs1and qs2
(i) Is π2RNgreater than or less than the true probability π2? Why?
.
Step by step
Solved in 3 steps
- Gary likes to gamble. Donna offers to bet him $31 on the outcome of a boat race. If Gary’s boat wins, Donna would give him $31. If Gary’s boat does not win, Gary would give her $31. Gary’s utility function is p1x^21+p2x^22, where p1 and p2 are the probabilities of events 1 and 2 and where x1 and x2 are his wealth if events 1 and 2 occur respectively. Gary’s total wealth is currently only $80 and he believes that the probability that he will win the race is 0.3. Which of the following is correct? (please submit the number corresponding to the correct answer). Taking the bet would reduce his expected utility. Taking the bet would leave his expected utility unchanged. Taking the bet would increase his expected utility. There is not enough information to determine whether taking the bet would increase or decrease his expected utility. The information given in the problem is self-contradictory.Gary likes to gamble. Donna offers to bet him $31 on the outcome of a boat race. If Gary's boat wins, Donna would give him $31. If Gary's boat does not win, Gary would give her $31. Gary's utility function is p1x^21+p2x^22, where P₁ and p2 are the probabilities of events 1 and 2 and where x₁ and x₂ are his wealth if events 1 and 2 occur respectively. Gary's total wealth is currently only $80 and he believes that the probability that he will win the race is 0.3. Which of the following is correct? (please submit the number corresponding to the correct answer). 1. Taking the bet would reduce his expected utility. 2. Taking the bet would leave his expected utility unchanged. 3. Taking the bet would increase his expected utility. 4. There is not enough information to determine whether taking the bet would increase or decrease his expected utility. 5. The information given in the problem is self-contradictory.Y5 Alfred is a risk-averse person with $100 in monetary wealth and owns a house worth $300, for total wealth of $400. The probability that his house is destroyed by fire (equivalent to a loss of $300) is pne = 0.5. If he exerts an effort level e = 0.3 to keep his house safe, the probability falls to pe = 0.2. His utility function is: U = w0.5 – e where e is effort level exerted (zero in the case of no effort and 0.3 in the case of effort).a. In the absence of insurance, does Alfred exert effort to lower the probability of fire?HINT: Calculate and compare the expected utility i) with effort, and ii) without effort. If effort is exerted, then the effort cost is paid regardless of whether or not a fire occurs.b. Alfred is considering buying fire insurance. The insurance agent explains that a home owner’s insurance policy would require paying a premium α and would repay the value of the house in the event of fire, minus a deductible “D”. [A deductible is an amount of money that the…
- Your utility function is given by M1/2. You have $100 and are planning to invest in a venture where you can win or lose 50 with equal probability. Will you accept the venture? What is the minimum gain you need to make in the good scenario such that you will invest in the venture?Suppose that an individual is just willing to accept a gamble to win or lose $1000 if the probability ofwinning is 0.6. Suppose that the utility gained if the individual wins is 100 utils. How much utility does one lose if one loses the gamble?Arielle is a risk-averse traveler who is planning a trip to Canada. She is planning on carrying $400 in her backpack. Walking the streets of Canada, however, can be dangerous and there is some chance that she will have her backpack stolen. If she is only carrying cash and her backpack is stolen, she will have no money ($0). The probability that her backpack is stolen is 1/5. Finally assume that her preferences over money can be represented by the utility function U(x)=(x)^0.5 Suppose that she has the option to buy traveler’s checks. If her backpack is stolen and she is carrying traveler’s checks then she can have those checks replaced at no cost. National Express charges a fee of $p per $1 traveler’s check. In other words, the price of a $1 traveler’s check is $(1+p). If the purchase of traveler’s checks is a fair bet, then we know that the purchase of traveler checks will not change her expected income. Show that if the purchase is a fair bet, then the price (1+p) = $1.25.
- Consider an individual who gets a utility of u(x) - x^1/2 from his total wealth x. Amsume that he has 160.000 AZN in the bank and owns a car with a value of 90,000 AZN. It is expected that will be stolen within the next year with 20% probability, whereas nothing will happen with. Your company tries to sell him an insurance package with the following properties; as an insurance premium now. (ii) if his car is stolen, your company will pay him a partial ation of 55,000 AZN. (iii) if his car is not stolen, there will be no paytent made by your .Should the individund buy this package, if the insurance premium in 12,500 AZN? ExplainAn investor is confronted with three investment opportunities as indicated in the following table: Investment A probability 1/2 1/4 1/4 Investment B Investment C probability 1/4 1/2 1/4 probability 1/2 3/8 1/8 return return return -$15 -$10 $0 $20 $10 $10 $35 $20 $20 Please answer Questions 10-13 based on this information. Consider Investment C above and an agent with a utility function U(x) = 1 – e-*. Assume that the initial wealth is 0. Based on the Principle of Expected Utility, how much is this agent willing to pay to receive the expected return of this investment without bearing the risk? O 6.25 0.5Q1. A farmer believes there is a 50-50 chance that the next growing season will be abnormally rainy. His expected utility function has the form Expected utility = 0.5lnYNR + 0.5lnYR Where and represent the farmers income in the state of ‘normal rain’ and ‘rainy’ respectively. Suppose the farmer must choose between two crops that promise the following income prospects Crop YNR YR Wheat $83,000 $10,000 Maize $83,000 $15000 What mix of wheat and maize would provide maximum expected utility to this farmer?
- A risk-averse agent, Andy, has power utility of consumption with riskaversion coefficient γ = 0.5. While standing in line at the conveniencestore, Andy hears that the odds of winning the jackpot in a new statelottery game are 1 in 250. A lottery ticket costs $1. Assume his income isIt = $100. You can assume that there is only one jackpot prize awarded,and there is no chance it will be shared with another player. The lotterywill be drawn shortly after Andy buys the ticket, so you can ignore therole of discounting for time value. For simplicity, assume that ct+1 = 100even if Andy buys the ticket How large would the jackpot have to be in order for Andy to play thelottery? b) What is the fair (expected) value of the lottery with the jackpot youfound in (a)? What is the dollar amount of the risk premium that Andyrequires to play the lottery? Solve for the optimal number of lottery tickets that Andy would buyif the jackpot value were $10,000 (the ticket price, the odds of winning,and Andy’s…Consider the lottery that assigns a probability r of obtaining a level of consumption CH and a probability 1-T of obtaining a low level of consumption cL an individual facing such a lottery with utility function u(c) that has the properties that more is better (that is, a strictly positive marginal utility of consumption at all levels of c) and diminishing marginal utility of consumption, u"(c) CL. Consider du(c) for the first derivative of the utility function with respect to dc d²u(c) dc2 du' (c) consumption and u"(c) which is also the derivative of the first derivative of the utility function). to be the second derivative of the utility function dcMicroeconomics Wilfred’s expected utility function is px1^0.5+(1−p)x2^0.5, where p is the probability that he consumes x1 and 1 - p is the probability that he consumes x2. Wilfred is offered a choice between getting a sure payment of $Z or a lottery in which he receives $2500 with probability p = 0.4 and $3700 with probability 1 - p. Wilfred will choose the sure payment if Z > CE and the lottery if Z < CE, where the value of CE is equal to ___ (please round your final answer to two decimal places if necessary)