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- The Minister of Transport released its Festive season road accident statistics which shows that the probability of drivers committing an accident is 8% with utility , where H standsfor year income.The Minister further claims these Festive season road accidents cost the state (in terms of claims lodged) an average of R84 000 per annum. The Road Accident Fund is an insurance scheme providing compulsory indemnity cover to victims of vehicle accidents and taxi drivers. (a) Suppose that an average commuter earns R84 000 per annum. What is the expected utility of each commuter if the driver decides not to take insurance. (b) What is the cost of insurance policy to the Road Accident Fund? (c) Due to high accident rates in South Africa during the Festive season, the Road AccidentFund has issued a warning to government that the fund will be insolvent soon. Advise the Minister on the cost of insurance that can collapse the scheme. please answer a,b,cPisa Pizza, a seller of frozen pizza, is considering introducting a healthier version of its pizza that will be low in cholesterol and contain no trans fats. The firm expects that sales of new pizza will be $20 million per year. While many of these sales will be to new customers, Pisa Pizza estimaes that 40% will come from customers who switch to the new, healthier pizzai nstead of buying the original version. a) Assume cusotmer will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? b) Suppose that 50% of hte cusomters who will switch from Pisa Pizza's orignial pizza to its healthier pizza will switch to another brand if Pisa PIzza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this case?Because Income depends on work effort and work effort depends on nutrition, suppose the relationship between income (Y) and total food availability (F) in a poor household is given by: Y = 10F + 20F2 – 0.6F3 a) If food availability in a two-person household is 20, would it be “rational” to share the food? Explain. b) If food availability in a two-person household is 30, would it be “rational” to share the food? Explain.
- Suppose a consumer has S100 today and he tells you he is willing to wait X amount of time for another $50. The same consumer also tells you that in the future if he has $10 he ts willng to wait Y amount of time for another $50.If Y is greater than X, does the individual exhibit hyperbolic discounting, exponential discounting, or is there not enough information to determine? Briely explain your answer.Betty is looking for a job. She considers job opportunities intwo cities. Bettyís utility is given by y- x, where y is the lifetime income andx is the amount spent on buying a house. The income from City 1 fluctuatesalthough the house price is stable. On the contrary, the income from City2 is stable while the house price fluctuates. If she moves to City 1, Bettycan earn a lifetime income y1 with probability alpha and 1 + y1 with probability1-alpha . The house price in City 1 is x1. Moving to City 2 means that Bettycan earn an income of y2. However, the house price is x2 with probabilitygamma and 1 + x2 with probability 1-gamma . Do the following: (a) Write down theexpected utilities associated with living in the two respective cities, i.e., V1and V2. (b) Derive the condition under which Betty chooses City 1.Vilfredo has complete and transitive preferences on cars. We know that he prefers a Hyundai Sonata to a Mazda 3, and that he finds a Mazda 3 at least as good as a Honda Civic. Can we conclude that he prefers a Hyundai Sonata to a Honda Civic? Yes No
- You have the following observations about a consumer's purchase choices of two commodities, 1 and 2: When the prices were ($3,$6) consumer purchases bundle A = (2, 5). When the prices were ($7, $3) consumer purchases bundle C = (3, 5) You did not observe when consumer purchases Bundle B = (4, 4) . a. Compute the cost of each bundle A, B, C given each price pair. Then determine how the consumer ranks the bundles using Directly Revealed Preferred (DRP) relation. b. What can you say about the bundles using Indirectly Revealed Preferreu (IRP) relation?true or false For the Cobb-Douglas utility function with α = 1/3 and β = 2/3, the indifference curve corresponding to a utility of 5 utils is B = 125A–2Need Step by Step answer: How to draft on Excel. Because Income depends on work effort and work effort depends on nutrition, suppose the relationship between income (Y) and total food availability (F) in a poor household is given by: Y = 10F + 20F2 – 0.6F3 a) If food availability in a two-person household is 20, would it be “rational” to share the food? Explain. b) If food availability in a two-person household is 30, would it be “rational” to share the food? Explain.
- Suppose that a consumer has a choicebetween two goods, X and Y. If the price of X is $2 and the priceof Y is $3, how much of X and Y does the consumer purchaseper period, given an income of $17 per period? Use the followinginformation about marginal utility:Units MUX MUY1 10 52 8 43 2 34 2 25 1 2The Minister of Transport released its Festive season road accident statistics which shows that the probability of drivers committing an accident is 8% with utility U(H) = √H, where H stands for year income. The Minister further claims these Festive season road accidents cost the state (in terms of claims lodged) an average of R84 000 per annum. The Road Accident Fund is an insurance scheme providing compulsory indemnity cover to victims of vehicle accidents and taxi drivers. (a) Suppose that an average commuter earns R84 000 per annum. What is the expected utility of each commuter if the driver decides not to take insurance. (b) What is the cost of insurance policy to the Road Accident Fund? (c) Due to high accident rates during Festive season, the road accident fund has issued a warning to the government that the fund will be insolvent soon. Advise the Minister on the cost of insurance that can collapse the schemeThe Minister of Transport released its Festive season road accident statistics which shows that the probability of drivers committing an accident is 8% with utility U(H) = √H, where H stands for year income. The Minister further claims these Festive season road accidents cost the state (in terms of claims lodged) an average of R84 000 per annum. The Road Accident Fund is an insurance scheme providing compulsory indemnity cover to victims of vehicle accidents and taxi drivers. (a) Suppose that an average commuter earns R84 000 per annum. What is the expected utility of each commuter if the driver decides not to take insurance. (b) What is the cost of insurance policy to the Road Accident Fund?