If members of the population The expected cost of healthcare is $ to pay the expected cost of healthcare with certainty, rather than take on the 2% risk of having to pay the full cost of the treatment, they are risk averse.
Q: Compute the equilibrium prices and quantities and the profits of the two separate, competitive…
A: The cost function of firm A: Ca(q,x) = q2 + x-42 P=12 The cost function of firm B: Cb (r,x) = r2 +…
Q: 3. St Louis area voters recently approved a tax on sales of recreational marijuana. Who would you…
A: Tax incidence refers to the distribution of the burden of a tax between buyers and sellers in a…
Q: Hourly Wage $10 $20 $30 Jeffrey's Hours of Work 0 20 40 Ted's Hours of Work 40 60 50 John's Hours of…
A: In the economic theory the labor supply is generally and actually the total hours basically and…
Q: 1 a) Consider a homogeneous goods industry where two firms operate and the linear demand is given by…
A: Since you have asked 'Multiple' question, we will solve the first question (Part A and Part B) for…
Q: The table shows the quantities produced and prices in 2015 and 2016 for an island economy which…
A: Real Gross domestic product refers to an inflation-adjusted measure that reflects the value of all…
Q: Arif and Aisha agree to meet for a date at a local dance club next week. In their enthusiasm, they…
A: Nash equilibrium is a concept in game theory that describes a state of a game where no player has an…
Q: The figure shows the cost structure for a monopolistically competitive firm selling a particular…
A: In a monopolistically competitive market, There exists a large number of buyers and sellers. The…
Q: Let the market demand curve be P = 70 - 2Q, and assume all sellers can produce at a constant…
A: a. For a monopolist, the profit-maximizing level of output is where marginal revenue (MR) equals…
Q: (a) Consider a homogeneous goods industry where two firms operate and the linear demand is given by…
A: Market demand curve: p=a-by1+y2 The cost of production for each firm is zero so MC =0 There are two…
Q: Draw the Demand and Supply Curves and determine the Equilibrium Price and Quantity given the…
A: An individual’s willingness to pay for each unit of the quantity he or she wishes to consume is…
Q: Assume that the following data describe the condition of the banking system. Use this information to…
A: M1 considers the most liquid part of the money supply like currency and assets that are or can be…
Q: The aggregate demand curve shows at each level of unemployment what is the total demand for goods…
A: The aggregate demand (AD) curve is a graphical representation of the relationship between the…
Q: A typical family on Sandy Island consumes only juice and cloth. Last year, which was the base year,…
A: The consumer price index is the measurement of prices paid by consumers for all the finished goods…
Q: Between 2008 and 2010, TOTAL EMPLOYMENT in the United States Declined by approximately 5.1 percent.…
A: According to the sectoral shifts theory, changes in the demand for products and services can affect…
Q: Arif and Aisha agree to meet for a date at a local dance club next week. In their enthusiasm, they…
A: In a mixed strategy Nash equilibrium, each player plays each action with a probability, rather than…
Q: Using the AD/AS model, analsye how monetary policy may be used alleviate inflationary pressure. In…
A: Government and central bank programs known as macroeconomic policy are aimed at achieving a number…
Q: Gino's is the only pizza restaurant in a commercial district. It makes $400 a day in revenue.…
A: Given Pay off matrix Vito Enter Do not enter Gino Accommodate 200,300 400,0…
Q: Suppose the inverse demand curve in a market is D(p) =a-bp, where D(p) is the quantity demanded and…
A: Cost function: c1(y1)=cy1 Demand function: D(p) =a-bp Revenue function: R(p)=D(p)-S(p)
Q: (a) Explain why a monopolistically competitive firm’s profit maximization occurs at the output level…
A: Monopolistic competition exists in a market where several small businesses offer comparable but not…
Q: Bill rides the subway at a cost of $0.75 per trip, but would switch if the price were any higher.…
A: Present worth refers to the current value of a future sum of money or cash flows, taking into…
Q: The cartel of copper exporting countries is called COPEC. As part of an international trade…
A: Price elasticity of demand is a measure of how sensitive the quantity demanded of a good or service…
Q: Three mutually exclusive earth-moving pieces of equipment are being considered for several large…
A: The annual worth method of alternative selection does not need that all alternatives should have the…
Q: (a) A monopolist has discovered that the inverse demand function of a person with income Y for the…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: c) Consider an individual firm in this industry. Should the firm produce in the short-run? Explain…
A: A market structure in which there are many buyers and sellers who are all selling identical goods or…
Q: On the following graph, plot the aggregate demand curve that results from varying the price level…
A: Demand refers to the willingness and ability of the consumer to purchase goods and services at given…
Q: 1. Consider the situation of two firms in the same industry and operating in the same mar- ket. Firm…
A: Firm A controls 70% of the market share Firm B controls 7% of the market share Other 3 firms share…
Q: 9. The price level and the market for bank reserves The following graph shows the market for bank…
A: Bank Reserve- it is the amount of money that commercial banks and other financial institutions…
Q: Table 11-7 Quantity of Lanterns 75 80 90 100 115 117 120 B) $32 C) SILI Fixed Cost Variable Cost…
A: Marginal Cost is the cost of producing an additional unit of output. Marginal Cost is the change in…
Q: Quantity MO ATO 21. In an oligopolistic mark MARE profits and losses, but 20. Refer to the above…
A: In a monopolistic competition, There exists a large number of buyers and sellers. The firms…
Q: Use the Front Page to answer three questions. FRONT PAGE Fed Raises Key Interest Rate Washington…
A: Federal Funds- the excess amount of reserves that commercial banks and other financial institutions…
Q: By how much did the disposable income of rich people increase as a result of the 2017 drop in the…
A: As disposable income = gross income - Tax Given Gross income of highest income bracket individuals…
Q: Use a graph to explain how a customs union results in trade creation
A: A customs union is a type of trade agreement in which countries eliminate trade barriers, such as…
Q: explain on the UK’s monetary policy framework. Use well-annotated AD/AS diagrams and comment on…
A: Macroeconomic policy, which is a set of initiatives from the government and central bank, aims to…
Q: A cement grinding mill "X" with a capacity of 47.894 tons per hour utilizes forged steel grinding…
A: Total cost is the term used to describe all expenses made by a firm in order to produce the desired…
Q: Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is…
A: Cost function of firm A Ca (q,x) = q^2 + (x - 4)^2 P=12 Cost function of firm B Cb (r,x) = r^2 +…
Q: = = Consider an economy with 3 agents, Mohammed (M), David (D) and Susan (S). There are two goods…
A: The marginal rate of substitution is the amount of one product that an individual is prepared to…
Q: Please answer correct explain please asap please Don't answer by pen paper plz.
A: As the CEO of Citigroup, my vision would be to establish Citigroup as a leading Fintech player in…
Q: There are two firms in the economy. Each firm employs positive amounts of capital and labour. The…
A: Marginal rate of technical substitution (MRTS) measures the rate at which a firm can substitute one…
Q: Consider an economy with 3 agents, Mohammed (M), David (D) and Susan (S). There are two goods…
A: Marginal rate of substitution is the amount of one good that a consumer is willing to enjoy in…
Q: Explain the effect of tax increases on savings on aggregate supply using the model of the…
A: Aggregate supply depicts the combination of the price level and aggregate quantity supplied by the…
Q: Consider an economy with 3 agents, Mohammed (M), David (D) and Susan (S). There are two goods…
A: Marginal rate of substitution is the amount of one good that a consumer is willing to enjoy in…
Q: ime the pizza market is a perfectly competitive constant cost industry, and all firms have identica…
A: Market Equilibrium is where the demand curve intersects the supply curve.
Q: Suppose the demand for a product is given by D(p) = -2p+230. A) Calculate the elasticity of demand…
A: Price elasticity of demand measures the responsiveness of quantity demanded of a good to a change in…
Q: The figure on the right displays the market for video game consoles, where nine buyers are…
A: The demand curve illustrates the functional relationship between the quantity demanded of a…
Q: c) Suppose the inverse demand curve in a market is D(p) =a-bp, where D(p) is the quantity demanded…
A: The concept of price leadership refers to a situaton where one firm in a market , known as the…
Q: Use a diagram to represent the Solow Growth model using the aggregate production function and the…
A: The Solow Growth model is a model that explains long-run economic growth through the accumulation of…
Q: How do market frictions, such as long online queues and error messages, affect the supply and demand…
A: Markets frictions, such as long online queues and error messages, can have significant effects on…
Q: Consider a homogeneous goods industry where two firms operate and the linear demand is given by p(y1…
A: Market demand curve: p(y1 + y2 ) = a - b(y1 + y2 )…
Q: Given the following minimum standards (cutoff points) Price = 3, Quality = 4, and Ease of use = 3,…
A: In the conjunctive decision rule , the companies are evaluated on the basis of several set…
Q: What inflation rate would occur if the unemployment rate were 5 percent, with
A: The Phillips curve states the inverse relationship between the inflation rate and the unemployment…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
- Suppose that the buyers do not know the quality of any particular bicycle for sale, but the sellers do knowthe quality of the bike they sell. The price at which a bike is traded is determined by demand and supply.Each buyer wants at most one bicycle.(ii) Assuming that each buyer purchases a bike only if its expected quality is higher than the price,and each seller is willing to sell their bike only if the price exceeds their valuation, what is theequilibrium outcome in this market?Do you think Canada's universal health care program can alleviate problems caused by moral hazard and adverse selection in the private insurance markets? Why or why not? John's utility curve over total wealth is given by U(W) =VW (i.e. square root of W). Suppose that he has a 50% chance of being healthy. If he is healthy, he gets all his wealth-$10,000. If he becomes sick, he only has $3,600 remaining after medical expenditures. Calculate John's wealth and utility when he does and does not get sick, his expected utility, expected wealth, and his expected loss. Now he has the option of buying health insurance Calculate the maximum amount John would be willing to pay to fully insure against the cost of the sickness. How much is the actuarially fair and risk premium? Suppose that society consists of large, equal numbers of identical male and identical female consumers. Male consumers are similar to John; female consumers differ only in that they face a 25% probability of being sick, but…If a risk‐averse individual owns a home worth $100,000, and that individual iswilling to pay a maximum of $1,000 for an annual fire insurance policy that covers theentire loss in the event of a fire, then we know that:A. There is a one percent chance that the home will be destroyed by fire inthe next yearB. There is a greater than a one percent chance that the home will bedestroyed by fire in the next yearC. There is less than a one percent chance that the home will be destroyedby fire in the next yearD. None of the above is correct
- Abigail is a consumer whose utility is a function of her total wealth W. u(W ) = log W. Suppose that Abigail begins with initial wealth of A = 100 but will suffer a serious illness with probability π = 0.15 which will require extensive treatment costing L = 80. To hedge against this risk, Abigail considers buying a health insurance policy. She may buy as much insurance I as she wishes at a cost of p per dollar of coverage, so her payoffs in each state are Healthy Ill Probability 0.85 0.15 No Insurance 100 20 Claim 0 I Premium −pI −pI a) Show that Abigail is risk averse. b) Suppose that the insurance premiums are actuarially fair so that p = 0. Find Abigail’s expected wealth E[W ] and expected utility E[u(W )] as functions of how much insurance she buys I. c) How much insurance should Abigail buy?Abigail is a consumer whose utility is a function of her total wealth W. u(W ) = log W. Suppose that Abigail begins with initial wealth of A = 100 but will suffer a serious illness with probability π = 0.15 which will require extensive treatment costing L = 80. To hedge against this risk, Abigail considers buying a health insurance policy. She may buy as much insurance I as she wishes at a cost of p per dollar of coverage, so her payoffs in each state are Healthy Ill Probability 0.85 0.15 No Insurance 100 20 Claim 0 I Premium −pI −pI a) Now suppose that the insurance company raises premiums to p = 0.2 so that they are no longer actuarially fair. Find Abigail’s expected wealth E[W ] and expected utility E[u(W )]. b) How much insurance should Abigail buy now?Preventive care is not always cost-effective. Suppose that it costs $100 per person to administer a screening exam for a particular disease. Also suppose that if the screening exam finds the disease, the early detection given by the exam will avert $1,000 of costly future treatment. a. Imagine giving the screening test to 100 people. How much will it cost to give those 100 tests? Imagine a case in which 15 percent of those receiving the screening exam test positive. How much in future costly treatments will be averted? How much is saved by setting up a screening system? b. Imagine that everything is the same as in part a except that now only 5 percent of those receiving the screening exam test positive. In this case, how much in future costly treatments will be averted? How much is lost by setting up a screening system?
- David is an expected-utility maximizer that likes to drive fast (and reckless at times), so his probability of an accident is 2/3. David’s preferences over wealth are u(w) = √?. Suppose that David’s initial wealth is $100. If David has an accident, he incurs a $51 loss. How much is the risk premium David willing to pay to be as well off in case of accident or not?Natasha has utility function u(I) = (10*I)0.5, where I is her annual income (in thousands). (a) Is she a risk loving, risk averse or risk neutral individual? She is [risk loving, risk adverse, risk neutral] , as her utility function is [concave, convex, linear] (b) Suppose that she is currently earning an income of $40,000 (I = 40) and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.6 probability of earning $44,000 and a 0.4 probability of earning $33,000. She should [take, not take] the new job because her expected utility of (approximately) [18.27,19.82,20,20.95,21.14] is [greater than, less than, equal to] her current utility of [18.27,19.85,20,20.95,21.14] .Microeconomics Wilfred’s expected utility function is px1^0.5+(1−p)x2^0.5, where p is the probability that he consumes x1 and 1 - p is the probability that he consumes x2. Wilfred is offered a choice between getting a sure payment of $Z or a lottery in which he receives $2500 with probability p = 0.4 and $3700 with probability 1 - p. Wilfred will choose the sure payment if Z > CE and the lottery if Z < CE, where the value of CE is equal to ___ (please round your final answer to two decimal places if necessary)
- Say there are two individuals; Hala and Anna who are deciding on either to buy health insurance on a pooling arrangement basis or otherwise. Both face a 30% probability of losing RM40 on medical services and 70% of losing nothing. With these information discuss whether Hala and Anna should join this arrangement or pay the medical services costs out of their own pocket money.Khalid has a utility function U = W1/2, where W is his wealth in millions of dollarsand U is the utility he obtains from the wealth. In a game show, the host offershim a choice between (A) $4 million for sure, or (B) a gamble that pays $1million with probability 0.6 and $9 million with probability 0.4.i. Graph Khalid’s utility function with the help of above utility function. Ishe risk lover? Explain. ii. Does A or B choice offer Khalid a higher expected prize? Explain yourreasoning with appropriate calculations. iii. Does A or B offer Khalid a higher expected utility? Again, show yourcalculations. iv. Should Jamal pick A or B choice? Why?Suppose Grace and Lisa are to go to dinner. Lisa is visiting Grace from outof town, and they are to meet at a local restaurant. When Lisa lived in town,they had two favorite restaurants: Bel Loc Diner and the Corner Stable. Ofcourse, Lisa’s information is out of date, but Grace knows which is betterthese days. Assume that the probability that the Bel Loc Diner is better isp > 1/2 and the probability that the Corner Stable is better is 1 - p. Naturedetermines which restaurant Grace thinks is better. Grace then sends amessage to Lisa, either “Let’s go to the Bel Loc Diner,” “Let’s go to theCorner Stable,” or “I don’t know [which is better].” Lisa receives the message, and then Grace and Lisa simultaneously decide which restaurant to go to. Payoffs are such that Grace and Lisa want to go to the same restaurant, but they prefer it to be the one that Grace thinks is better. More specifically, if, in fact, the Bel Loc Diner is better, then the payoffs from theiractions are as shown in the…