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- Suppose the demand functions for two products are q1 = f(p1, p2) and q2 = g(p1, p2) wherep1, p2, q1, and q2 are the prices (in dollars) and quantities for products 1 and 2. Consider thefour partial derivatives∂q1/∂p1,∂q1/∂p2,∂q2/∂p1and ∂q2/∂p2,State the sign of each of these partial derivatives if:(a) the products are complementary goods(b) the products are substitute goods.Consider a product market with three consumers A, B and C with demand function PA = 6 – QA, PB = 6 – 2QB and PC = 12 – QC respectively, where P is the price in dollars and QA, QB and QC are the quantities demanded by Consumer A, B and C respectively. The marginal cost of the product is constant at $4. (i) If the product is public good, analyse the product and determine the optimal quantity of the product in the market.(ii) How will your answer be different if the product is a private good instead?Consider a product market with three consumers A, B and C with demand function PA = 6 – QA, PB = 6 – 2QB and PC = 12 – QC respectively, where P is the price in dollars and QA, QB and QC are the quantities demanded by Consumer A, B and C respectively. The marginal cost of the product is constant at $4. (i) If the product is public good, analyse the product and determine the optimal quantity of the product in the market.(ii) How will your answer be different if the product is a private good instead? (Hi there, may I requst for a detailed step by step explanation as i struggle with this topic. Thank you)
- D6) if the price elasticity of demand for a good is greater than three, Dan the demand for that good is? a. perfectly elastic b. elastic c. inelastic d. unit elasticAn investor is consider four different opportunities, A, B, C, or D. The payoff for each opportunity will depend on the economic conditions, represented in the payoff table below. Economic Condition Investment Poor Average Good Excellent (S1) (S2) (S3) (S4) A 50 75 20 30 B 80 15 40 50 C -100 300 -50 10 D 25 25 25 25 What decision would be made under minimax regret?1.) Find the requested value (to the nearest dollar) and explain what each of the other values represents a.) Find S b.) Find R
- Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? 500 (already answer) If there is an external benefit of $3, what is the efficient quantity? 700 (already answer) For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? 3 (already answer) Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the…Which of the following statements are true? A. The lower the M-squared the better. B. The higher the T-squared the better. C. The lower the Sharpe ratio the better. D. The higher the Jensen's alpha the better. E. The higher the Treynor ratio the better. Group of answer choices A, B, and D A, B, and C D and E B, C, and D B, D, and E"Quadratic utility is the best form of the utility function to assume for any investor".Enumerate two argunentsagainst this statement.(maximum of two sentences per argument)
- In Problem 22, if P(s1) = 0.25, P(s2) = 0.50, and P(s3) = 0.25, find a recommended decision for each of the three decision makers. (Note: For the same decision problem, different utilities can lead to different decisions.) 22. Three decision makers have assessed utilities for the following decision problem (payoff in dollars): The indifference probabilities are as follows: a. Plot the utility function for money for each decision maker. b. Classify each decision maker as a risk avoider, a risk taker, or risk-neutral. c. For the payoff of 20, what is the premium that the risk avoider will pay to avoid risk? What is the premium that the risk taker will pay to have the opportunity of the high payoff?Consider the following utility function: u = 400 (1 + 1)−1. xy a. Is this utility function homogenous? Briefly explain. b. Use implicit differentiation to find the MRCS. c. Write down an expression for the indifference curve if u = 20.Many decision problems have the following simple structure. A decision maker has two possible deci-sions, 1 and 2. If decision 1 is made, a sure cost of c is incurred. If decision 2 is made, there are two possibleoutcomes, with costs c1 and c2 and probabilities p and1 2 p. We assume that c1 , c , c2. The idea is thatdecision 1, the riskless decision, has a moderate cost,whereas decision 2, the risky decision, has a low costc1 or a high cost c2.a. Calculate the expected cost from the riskydecision.b. List as many scenarios as you can think of thathave this structure. (Here’s an example to get youstarted. Think of insurance, where you pay a surepremium to avoid a large possible loss.) For eachof these scenarios, indicate whether you wouldbase your decision on EMV or on expected utility.