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Q1. Why does the assumption of independence of risks matter in the examples of insurance? Illustrate what would happen to premiums if the probabilities of house burning were positively correlated? Can you think of a situation where they might be negatively correlated?
Q2. ) If the price of baseball tickets is $12 every also hockey tickets are $20 every, draw the budget constraint for the consumer. Be sure to specifically label every intercept. Elucidate why (10, 6) is on this budget constraint but you cannot tell anything about the MRS at this point.
What factors underlie whether specialization in production will be partial or complete on an international basis.
What are the strengths and weaknesses of the measure of welfare used by many economists: consumer welfare plus producer surplus.
The developing country uses the $100 bank balance to import $100 worth of food from the United States (US).
Decrease will have on the desired proportions of capital and labor used in producing the given level of output at minimum total cost.
Statistical analysis indicates that a=0.8 and b=0.3. The firm's owner claims the plant has increasing returns to scale.
Suppose that the government imposed a $1 tax each time someone used an ATM.
Is it advantageous for all countries to utilize cheaper labor or does importing your goods.
A price index for nonresidential construction was 14 in 1949, 92 in 1987, and 114.5 in 2000. According to these numbers, what did the hospital cost approximately.
Given the demand and cost conditions, what price, output and profits result in the short run? What will happen as the firm moves from the short to the long run
How do the GDP per capita change after accounting for price indices. Why is it important to use price index adjustments.
Why might these firms agree to form a cartel. If such a cartel is formed, use the prisoner's dilemma to explain why it may or may not survive.
Describe the determinants of varying levels of income. What factors determine a wages of a person
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