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- In this problem annual income for ages 20 to 80 is given graphically. People sometimes spend less than their income (to save for retirement) or more than their income (taking out a loan). The process of spreading out spending over a lifetime is called consumption smoothing. annual income ($10nns nar vaar) years) (a) Find the average annual income for these years. The average annual income is dollars/year. eTextbook and Media (b) Assuming that people spend at a constant rate equal to their average income, when are they spending less than they earn, and when are they spending more? Enter your answers in increasing order. They spend less than their income every year from age to They spend more than their income every year from age to and from age to. On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according to thefunctionU (c, b) = 20c - c2 +18b- 3b2.How many cigars and glasses of brandy does he consume during an evening? (Cost is no objectto J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum of glasses ofbrandy and cigars consumed to 5. How many glasses of brandy and cigars will he consumeunder these circumstances?Pls help ASAP on both
- Asaap ans#2. Hannah gets 50 utils from visiting her family for Thanksgiving. But there is a 1% chance that she will get the coronavirus from them. If she gets the coronavirus, her utility is -6000 utils. Her total utility would be -5950 (i.e. 50 – 6000). She gets 0 utils from staying healthy (total utility = 50 + 0 = 50). What is her expected utility? a. 50 utils b. -6 utils c. -10 utils d. -5999.5 utils e. -6000 utils f. None of these #3. Hannah gets 50 utils from visiting her family for Thanksgiving. But there is a 1% chance that she will get the coronavirus from them. If she gets the coronavirus, her utility is -6000 utils. Her total utility would be -5950 (i.e. 50 – 6000). She gets 0 utils from staying healthy (total utility = 50 + 0 = 50). If Hannah doesn't visit her family for Thanksgiving, then she gets -25 utils from eating turkey cold cuts alone in front of the TV. In that case, there is no risk of getting sick. What will Hannah do? a. Visit her family for Thanksgiving b. Not visit her…A farmer believes there is an equal chance that the next growing season will be abnormallyrainy. His expected return function has the formExpected return = 0.5lnYNR + 0.5lnYRwhere YNR and YR represent the farmer’s income in the states of “normal rain”and “rainy,” respectively.Suppose the farmer must choose between two crops that promise the following incomeprospects:Crop YNR YRMaize $14,000 $5,000Cotton $9,500 $7,500a) Which of the crops will he plant?b) Suppose the farmer can plant half his field with each crop. Would he choose to do so?Explain your result.c) What mix of Maize and Cotton would provide maximum expected utility to this farmer?d) Would Maize crop insurance, available to farmers who grow only Maize, which costs$2,000 and pays off $4,000 in the event of a rainy growing season, cause this farmer tochange what he plants?
- 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…Pls help ASAP on this question (52)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
- can you o=please solve this simple qouestoinIt is question 3.4 ezjointLela must decide to go on a winter trip to norway with the hope of seeing northern light would yield a utility level of 2,000 but she has only a 50% chance that they will show during the days of her trip. making the trip without seeing the lights would yield a utility level of 100 and there is 50 % chance of this happening. what is lela's expected utilty if show goes on the trip? a. 2,100 b.1,050 c.42 d.950