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- Ann prefers an improving sequence of annual wages 25K, 30K, 35K to the decreasing sequence 35K, 30K, 25K. Her behavior can be explained by (A) discounted utility model with positive discounting; (B) hyperbolic discounting model; (C) procrastination; (D) none of the above.There is a telling joke about two economists walking down the street. They spot a $20 bill on the sidewalk. One stoops to pick it up, but the other one says, “Don’t bother; if the bill was real, someone would have picked it up already.” The lesson is clear. A strong belief in efficient markets can disable the investor and make it appear that no research effort can be justified. Do you think there are still enough anomalies in the empirical evidence to justify the search for overpriced/underpricedsecurities? Support your answer with examples and new theories in the context of Efficient Market Hypothesis.Name three products for which subjectivediscretionary income might be a better predictor ofconsumption than actual income. Justify your answer.
- The ‘Rawlsianism’ approach to social welfare improvement is based on a ‘Pareto improvement’ principle. Do you agree? Explain.Indicate whether the statement is true or false, and justify your answer.Aggressive natalist policies have successfully reversed birth rate declines in most European countries.Explain how Hick's Paradox challenges the traditional assumption of monotonicity in consumer preferences and its implications for welfare economics.
- Can ethnocentric predisposition result in Cultural and Marketing Myopia? Justify your answer with an example.One proposal includes increasing the EITC for childless workers to provide additional assistance for many poor workers. While an increase in the EITC would increase resources to qualifying childless workers, what impact will it have on their working decision? Assume a basic hours towards leisure and income towards consumption model. a. If qualifying childless workers already have a strong preference to work so they are already choosing to work (ex: 10 hours), an increase in the EITC could lead to a new choice involving fewer hours spent working, more hours spent towards leisure and more income towards consumption. Thus, the EITC expansion could discourage work. b.If qualifying childless workers already have a strong preference to not work so they are already choosing to work very littleand mostly enjoy leisure, an increase in the EITC could lead to a new choice involving more hours spent working, fewer hours spent towards leisure and more income towards consumption. Thus, the…Medicare recipients can purchase supplemental private insurance (known as Medigap insurance) to fill the gap in coverage left by Medicare. This gap includes copayments, deductibles, and prescription drug expenses not covered by Medicare. Several years ago, the government enacted regulations that specify minimum standards for items that Medigap policies must cover. This made the policies more expensive, and as a consequence, about 25 percent of the elderly who would have purchased some Medi-gap insurance purchased none at all [Finkelstein, 2004]. Consider an individual who consumes two goods, "insurance" and "all other goods." The cost of a unit of Medigap insurance is $1, as is the cost of a unit of all other goods. Sketch a budget constraint and set of indifference curves that are consistent with the following scenario: In an unregulated market, an individual with a $30,000 income purchases $5,000 worth of Medigap insurance. The government then puts mandates on Medigap policies that…
- describe how COVID-19 may differentially affect families across the socioeconomic spectrum. That is, how might the consequences of COVID-19 for families with low SES be similar to or different from the consequences of COVID-19 for families with high SES?Indicate whether each statement is true or false, and justify your answer.If members of a society have transitive preferences, then that society as a whole must also have transitive preferences.How to test the presence of multicollinearity.
