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(1) suppose you win a state lottery. the prize is $1,000,000 but it is paid over 10 years in equal installments of $100,000 each. what is the prize actually worth?
2. Consider the utility function U(x, y) = 3x - y with MUx = 3 and MUy = -1.a) Is the assumption that more is better satisfied for good x? Is it satisfied for good y?b) Does the marginal utility of x diminish, remain constant or increase as the consumer buys more x?c) What is MRS?d) Is MRS diminishing, constant or increasing as the consumer substitutes x for y along an indifference curve?e) On a graph with x on the horizontal axis and y on the vertical axis draw a typical indifference curve when utility level is U1.f) On the same graph draw a second indifference curve U2 with U2 > U1.
3. Jane's utility function is U(x,y) = 2 x2 y with associated marginal utility functions MUx = 4xy and MUy = 2x2. Jane has income I and prices of x and y are respectively given by Px and Py.a) Determine Jane's demand for x as a function of income and prices.b) Assume now that her level of income and prices are set at the following values: I = 30, Px = 2, Py = 1. Determine her choices of x and y and compute the level of utility she gets.
4. Paul consumes apples and bananas. His utility function is U(a,b)=a1/2+b. The price of bananas is Pb=4. The price of apples is initially Pa=1 but then rises to Pa=2. Paul's income is I=10.a) Compute Paul's demand for apples and bananas before the price change.b) Compute Paul's demand for apples and bananas after the price change.c) How much income do we need to give Paul after the price increase in order to keep him as happy as he was before? i.e. in order to keep him at the same level of utility he had before the price change?
Assume that the economy can experience high growth, normal growth, or recession. You expect the following stock market returns for the coming year under these conditions. State Probability Return High Growth 0.2 +30%
Weekly demand and cost relations for Sandpiper Products, Inc., are given by the equations P = $180 - $10Q (Demand) TC = $75,000 + $5Q + $7.5Q2 Where Q is the quantity produced and sold per week. a. Determine the profit maximizing price and output. (Q..
Calculate monopoly output, price, and maximum profit when the market demand curve is QD = 20 - 2p, MC = 4Q, and TC = 2Q2. If a new innovation enables the monopoly to cut its costs by 50%, but it costs $50 to adopt this innovation.
Suppose your company is considering three health insurance policies. The first policy requires no tests and covers all preexisting illnesses. The second policy requires that all covered employees test negative for the HIV virus.
Suppose the daily demand for coffee in Seattle is Q^d=100,000(3-P)^2 A. What is the elasticity of demand (Ed) at a price of $2.(Please show exactly which equation is needed to find Ed here) B. At what price would the total expenditure on coffee be la..
If the price of Good A increases by 50% from its original price which indifference curve will this consumer end up on Will the consumer be buying more of Good Y, more of Good X, or more of both goods.At the point of consumer equilibrium what is the..
Output variable: 1 2 3 4 5 6 7 8 9 Costs: $35 75 110 140 175 215 260 315 390 a) Show AFC, ATC, AVC and MC in a table b) GRaph th AFC, ATC, AVC and MC curves. Say fixed costs dropped to $50. Which curves shifted.
Define a variable Z that is a function of the sample average ? and follows a standard normal distribution. What is the probability that ? will be in the interval [1, 3] What is the probability that ? will be in the interval [-1, 1] What is the probab..
The banking market in Athens, Ohio, currently has four banks with market shares of 60 percent, 20 percent, 15 percent, and 5 percent. The two smallest banks have propesed a meeting. Under the standard merger guidelines of the Federal Reserve.
Consider the following setup for problems #16-#20: C = 1000 + 0.7(Y - T), I = 400, NX = 300 - 0.2Y, G = 10001.) What are the marginal propensities to consume and to import, respectively 2.) Suppose taxes are 1000, then what is the level of equilibriu..
The first is a 15-year to maturity bond with a 6.60% coupon rate, paid annually. The price of this bond today is 100% of face value. The second bond is a 20-year to maturity bond issued 7% coupon rate, paid annually. The price of this bond is 101...
Abc Inc. sells bike tires for $25. It's sales have averaged 8,000 units per month. Recently its closes competitor Efg Inc. reduced their price for bike tires form $35 to $30. A result Abc's sales declined by 1.500 units per month.A. what is the ar..
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