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You have developed a new app that has a 30% chance of succeeding and earning $1,000,000, and a 70% chance of earning nothing. Your utility is the cube root of income (Utility = Y1/3); you have $1,000,0001/3 happiness if your app succeeds but 01/3 happiness if it fails. a) What is the expected value of your app? What is your utility at that income? Note that in EXCEL, the cube root function is "=X^.3333" for the number X b What is your expected utility from your app? (Note: this is the weighted average of utility when the app succeeds and when it fails where the weight is the probability of success.) c) What would be the price, P, of a risk-neutral insurance plan where you have a guaranteed income of a successful app and the insurance company would break even but make no profit? d) What is the maximum price you would be willing to pay? (Hint: what is the expected utility with and without insurance? The premium is the maximum amount that you would sacrifice to be guaranteed as much utility as without insurance.) e) Considering your answer to part A, in general, why do people buy insurance? How can insurance companies profit? What happens to expected utility when people can buy insurance at a fair market price? f) Define moral hazard and adverse selection. How do these affect health insurance markets? Would you expect markets with moral hazard and adverse selection to provide the optimal amount of long-term care insurance at an efficient price?
draw an aggregate production function with typical shape and label it f. make sure to label the axis of the graph. now
what are these prices? b) How much output is sold at these prices and what is the profit in each market? c) Based on your answer in part a, justify why would the firm charge same or different prices.
Show that the optimal amount of the public good isthe same in every Pare to efficient allocation. What is this amount? Will the optimalamount of the public good change if the initial wealths of the two individuals change?
Provide some example of a goods that you purchase or market at your workplace to demonstrate why demand curve slopes downwards and why supply curve slopes upwards?
What is the elasticity of demand with respect to income? Comment on and interpret your answer (i.e., the sign and magnitude of the elasticity).
according to kluver what are the ramifications of technology and globalization on global communication?compare kluvers
They argue that in most situations, we couldn't avoid nudging even if we wanted to, because whatever pol- icy we choose will contain some set of unconscious nudges and incentives that will influence people.
Two suspects are arrested and charged with a crime. The police lack sufficient evidence to convict the suspects, unless at least one confesses. The police hold the suspects in separate cells and explain the consequences that will follow from the a..
What would be the effect if the rate is lowered to 4%, or raised to 9%? Why would the federal reserve change these rates?
using the rudebusch version of the taylor rule from the internet activity compute the value of the federal reserves
Economic fluctuations (or business cycles) are fluctuations in the level of economic activity, relative to a long-term growth trend. Comparing and contrasting the economic fluctuation the United States has experiences from 1990 to current date.
BASED ON YOUR RESEARCH AND ANALYSIS, DETERMINE THE MONETARY POLICY ACTION YOU THINK SHOULD BE UNDERTAKEN. DETAIL THE MONETARY POLICY RECOMMENDATION YOU MAKE AT THE NEXT FEDERAL OPEN MARKET COMMITTEE MEETING.
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