People in a certain group have a 0.75% chance of dying this year. If a person in this group buys a life insurance policy for $6000 that pays $1,000,000 to her family if she dies this year and $0 otherwise, what is the expected value of the policy? (enter a minus sign if necessary and round your answer to the nearest dollar).
Q: Income per person exceeds $ 25,000 in many countries but it is below $ 1,000 per person in many…
A: Solow growth model:- The Solow Growth Model, an exogenous model of economic increase, examines…
Q: hich of the following is likely to increase the supply of labour? a decrease in fringe benefits…
A: Increase in the labour supply leads to cheaper availability of labor in the market. It reduces the…
Q: Sony announces Smart Tennis Sensor Tennis racket maker Babolat introduced its smart racket Play Pure…
A: Monopolistic competition is where there are numerous sellers selling homogeneous but separated…
Q: So to maximize profit, you want to make sure that your customers buy as many concessions as…
A: Given information Total customers=3220 Group P: Buys only popcorn: 750 customer Croup C: Buys only…
Q: Major medical complexes and their service providers continue to move toward advanced health…
A: The ordinary depreciation strategy is doubled by the double falling balance depreciation method,…
Q: What is multiple tax system? Write its merits and demerits
A: Taxes are defined as compulsory charges levied by the government on teh citizens. These taxes…
Q: Monetary policy involves a change in interest rate or money supply. If the interest rate rises,…
A: Given information Aggregate demand function P=6-0.2Y Aggregate supply function P=1+0.15Y
Q: Figure 10-3. Calculate the markup this firm is able to charge. Group of answer choices $2 $4 $6 $0
A:
Q: In the market for a nonrenewable natural resource, the equilibrium price is the price that gives…
A: At the marketplace, when buyers and sellers are exchanging a non-renewable resource, it can be said…
Q: From the following data for Country X, you are required to calculate: GDP at market prices…
A: National income refers to the factors income earned by the normal residents during an accounting…
Q: 1. The economy starts out with a balanced Federal budget. If the government opts to implement…
A: Fiscal policy refers to the policy of the government to control the money supply in the economy.…
Q: As a member of the FOMC, Write a directive to the committee about the conduct of monetarybpolicy…
A:
Q: *** Babolat, Sony, and other smart racket producers are attempting to maximize economic profit…
A: Under monopolistic competition, there are a large number of buyers and products are differentiated.…
Q: If the economy exhibited an inflationary gap, the government should follow a(n). policy, which would…
A: Inflationary gap occurs where the aggregate demand exceeds the level of output. Government has to…
Q: Insulin Prices Price $3,700 $50 U.S.A 100 MR 300 Demand Price Quantity $600 MC=AC $50 300 Mexico MR…
A:
Q: The managers of a company are considering an investment with the following estimated cash flows.…
A: Capital Investment = $28,000 Annual Revenues = $19,000 Annual Expenses = $5500 Market Value = $500…
Q: 1. A bank has $140,000 in reserves, $1,600,000 in loans, and checkable deposits of $1,250,000. If…
A: A required reserve ratio is the fraction of deposits that regulators require a bank to hold in…
Q: The graph shows the demand, marginal revenue, marginal cost, and average total cost curves of La…
A: The firm maximizes its profit or minimizes its losses at the point where the marginal cost of…
Q: Monopolistic Competition | a. Graphically represent a monopolistically competitive firm, using the…
A: Since you have provided multiple subparts questions, we will solve the first three subparts for you.…
Q: A job is a contract between a OA. bank; household; capital OB. manufacturer; retailer;…
A: The different factors of production include capital, land, labour, and entrepreneurs. These are…
Q: G6
A: We know that The short run aggregate supply curve is upward sloping, indicating a direct…
Q: Examples of contractionary policy to help with an inflationary gap would be: (Select All that…
A: Inflationary gap occurs when aggregate demand exceeds the output level. The output is not sufficient…
Q: Which of the following would be included in the calculation of GDP? Repairs to your car done by…
A:
Q: What is regressive and degressive tax?
A: Meaning of Tax Imposition: Here, the tax imposition or the tax hike refers to the situation under…
Q: un QUESTION 1 ( CS. QUOTA Open Economy (International Trade) with Import Quota (Import Licence fee…
A: The region between the demand curve and equilibrium pricing is known as the consumer surplus. Area…
Q: 56
A: We know that Fed is the central bank of America. It is responsible for controlling inflation and…
Q: Consider a monopolist facing Demand, Marginal Costs, and Marginal Revenue as illustrated in the…
A: Here, the given graph shows the sketch of a monopoly market where a monopolist is facing the given…
Q: A small print shop is investing in new printing equipment that will cost $30,000. They estimate that…
A: Given that :- New printing equipment cost $30,000 Additional revenues for every of the next 6 years…
Q: A machine purchased for $919866 has a depreciable life of 7 years, and it has a terminal book…
A: The initial cost of the machine (P)= 919866 Life of the machine =7 years Salvage value after 7 years…
Q: Firm Measures: Productivity, Costs, Revenues, and Profits Labor Total Product (TP) Fixed Cost (TFC)…
A: The marginal product of labor (MP) refers to an increase in total production when one additional…
Q: Use Rajiv's supply schedule and Kevin's demand schedule to find the quantity supplied and quantity…
A: Please find the answer below. QUANTITY DEMANDED: Quantity demanded is a term used in economics to…
Q: Consider a health insurance market. The market has many insurers so that each insurance company…
A: Given: U(X) = X0.5 Initial wealth = $200 Gym membership = $6 which reduces going to a doctor from…
Q: It is likely that airplane tickets will increase 8% in each of the next 5 years. The cost of a plane…
A: Given:- Cost of plane=P10622Time=5 YearsI=2%g=8% To calculate:- Money required to be deposited=?…
Q: Business travelers riding on Amtrak from Rocklin to Oakland are charged $20 for a daily pass, but on…
A: Different prices charged on different days is also a type of price discrimination and this type of…
Q: Your current prices are $311 in the southwestern region; $278 in the western-region and $240 in the…
A:
Q: Suppose that 1 Swedish krona could be purchased in the foreign exchange market today for $0.36. If…
A: Appreciation, or capital appreciation, is an increase in the price or value of an asset.…
Q: Which of the following is not a barrier to entry? Group of answer choices high fixed costs ownership…
A: The barriers to entry into a market are one of the feature of defining a market structure. Barriers…
Q: T5
A: We know that Economic System refers to which societies or government organize & distribute…
Q: The price-demand equation and the cost function for the production of active styluses are given,…
A: We know, e = -20(P/9400- 20P) If price = $150, we have elasticity as: e = -20(150/9400 - 3000) e =…
Q: A library shelving system has a first cost of $24,000 and a useful life of 9 years. The annual…
A: INTRODUCTION: BENEFIT TO COST RATIO: The benefit to cost ratio shows the connection among the fee…
Q: Q) The market demand for the output is P = 80-Q, where Q is the output level and P is the price per…
A: A labor market is where workers and employees cooperate with one another.
Q: Diagram 1 Price Level (PL) O ADO O AD1 YF O AD2 ADS O AD3 AD4 AD2 If you cannot see the image above,…
A: Aggregate Demand Aggregate demand refers to the entire amount of demand for all completed goods and…
Q: why do extractive industries companies need a social license to operate in a host state and how do…
A: Large infrastructure has long served as a metaphor for progress. If it is supported by the creation…
Q: what are three ways to harness foreign direct investment flowing into the extractive sector for the…
A: Foreign Direct Investment A foreign direct investment occurs when a business or investor from…
Q: From the trade model, we found that in most cases, trade creates value. Where do we see that…
A: As we know that people exchange the goods and service at certain price which is determined by…
Q: what are the advantages and disadvantages of open economies and closed economies? How has covid and…
A: An open economy is one that engages in international trade of goods, services, and financial assets.…
Q: The following graph shows the labor market in the fast-food industry in the fictional town of…
A: The forces of demand and supply of labor as represented by demand and supply curves respectively can…
Q: Consider the two-player game whose peri choices in the first period are revealed bef equilibria of…
A: To begin with, it is crucial to remember that a Nash equilibrium for the second overtime must be…
Q: 02. The change in the budget line from B2 to B1 was caused by: O (a) an increase in the consumer's…
A: The budget line is a graphical representation of all potential combinations of the two commodities…
Q: Use the diagram below to answer the next three questions. What price and quantity will the firm…
A: The concept of externality is very important as it covers the widely required concept of…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- Find the expected value assuming the risk factor is 30 % and the interest rate is 15%, if you will receive $20,000 one year from today. Find the expected value assuming the risk factor is 30 % and the interest rate is 15%, if you will receive $20,000 two years from today.A drug company is considering investing $100 million today to bring a weight loss pill to the market. At the end of one year, the firm will know the payoff; there is a 0.50 probability that the pill will sell at a high price and generate $37 million per year of profit forever and a 0.50 probability that the pill will sell at a low price and generate $I million per year of profit forever. The interest rate is 10%. Suppose the firm decides to wait one year to determine whether the pill will sell at a high or low price. The firm will not invest if it learns that the pill will sell at a low price. What is the net present value of waiting one year to make the investment?O $88 millionO$122.72 millionO $201.22 millionO $64.5 millionY = 30 - 25X + error What is the expected value of Y when X is 0? Y = 10 + 13.57*X + error By how much does the expected value of Y change if X increases by 18.02 units? (Round your answer to two decimal places: ex: 123.45)
- You are considering a $500,000 investment in the fast-food industry and have narrowed your choice to either a McDonald’s or a Penn Station East Coast Subs franchise. McDonald’s indicates that, based on the location where you are proposing to open a new restaurant, there is a 25 percent probability that aggregate 10-year profits (net of the initial investment) will be $16 million, a 50 percent probability that profits will be $8 million, and a 25 percent probability that profits will be −$1.6 million. The aggregate 10-year profit projections (net of the initial investment) for a Penn Station East Coast Subs franchise is $48 million with a 2.5 percent probability, $8 million with a 95 percent probability, and −$48 million with a 2.5 percent probability. Considering both the risk and expected profitability of these two investment opportunities, which is the better investment? Explain carefully.Dr. Gambles has a utility function given as U(w)=In(w). Due to the pandemic affecting his consulting business, Dr Gambles faces the prospect of having his wealth reduced to £2 or £75,000 or £100,000 with probabilities of 0.15, 0.25, and 0.60, respectively. Suppose insurance is available that will protect his wealth from this risk. How much would he be willing to pay for such insurance?Find the Pratt - Arrow risk - aversion function for a utility function U(W) = log(0.5-W + 500), where W is the amount of wealth in €. Suppose that an investor's wealth is subject to outcomes -800 €, 500 €, 500 € and 1, 000 € which affect the initial amount of 2,500 € with probabilities of their occurrence 40%, 15%, 15% and 30%, respectively. a) Using the Taylor approximation to certainty equivalent, calculate an approximate expected utility value. b) Calculate the certain equivalent of the investor's uncertain wealth. Interpret.
- John wants to buy a used car. He knows that there are two types of car in the market, plums and lemons. Lemons are worse quality cars and are more likely to break down than plums. John is willing to pay £10, 000 for a plum and £2, 000 for a lemon. Unfortunately, however, he cannot distinguish between the two types. Sellers can offer a warranty that would cover the full cost of any repair needed by the car for y ∗ years. Considering the type and likelihood of problems their cars can have, owners of plums estimate that y years of guarantee would cost them 1000y, owners of lemons estimate that the cost would be 2000y. John knows these estimates and decides to offer £10, 000 if a car comes with y ∗ years of warranty, £2, 000 if a car comes without warranty. For which values of y ∗ is there a separating equilibrium where only owners of plums are willing to offer the y ∗ -years warranty? Clearly explain your reasoning.Burger Prince Restaurant is considering the purchase of a $100,000 fire insurance policy. The fire statistics indicate that in a given year the probability of property damage in a fire is as follows: Fire Damage $100,000 $75,000 $50,000 $25,000 $10,000 $0 Probability .006 .002 .004 .003 .005 .980 If Burger Prince was risk neutral, how much would they be willing to pay for fire insurance? If Burger Prince has the utility values given below, approximately how much would they be willing to pay for fire insurance? Loss $100,000 $75,000 $50,000 $25,000 $10,000 $5,000 $0 Utility 0 30 60 85 95 99 100Suppose your utility function for money is a square-root function of its value in US dollars. So, for instance, $400 is worth 20 utils for you, $961 is worth 31 utils for you, and $62.5K is worth 250 utils for you. Now, let’s say your annual salary is $90K, although there is a small risk (p = 0.05) that something catastrophic will happen and reduce your income for the year to $14.4K. An insurance company comes along and offers to insure you against the loss of your salary. The cost of the insurance is $4,736. If you buy the policy and catastrophe strikes, the insurance company will pay out the $75,600 that you would otherwise have lost. From the standpoint of maximizing expected utility, would buying this insurance be a good deal for you? What would be the insurance company’s expected monetary value of selling you the policy?
- Gary likes to gamble. Donna offers to bet him $31 on the outcome of a boat race. If Gary’s boat wins, Donna would give him $31. If Gary’s boat does not win, Gary would give her $31. Gary’s utility function is p1x^21+p2x^22, where p1 and p2 are the probabilities of events 1 and 2 and where x1 and x2 are his wealth if events 1 and 2 occur respectively. Gary’s total wealth is currently only $80 and he believes that the probability that he will win the race is 0.3. Which of the following is correct? (please submit the number corresponding to the correct answer). Taking the bet would reduce his expected utility. Taking the bet would leave his expected utility unchanged. Taking the bet would increase his expected utility. There is not enough information to determine whether taking the bet would increase or decrease his expected utility. The information given in the problem is self-contradictory.If a risk‐neutral individual owns a home worth $200,000 and there is a three percent chance the home will be destroyed by fire in the next year, then we know that:a) He is willing to pay much more than $6,000 for full cover.b) He is willing to pay much less than $6,000 for full cover.c) He is willing to pay at most $6,000 for full cover.d) None of the above are correct.e) All of the above are correct.A risk-averse manager is considering two projects. The first project involves expanding the market for bologna; the second involves expanding the market for caviar. There is a 10 percent chance of a recession and a 90 percent chance of an economic boom. During a boom, the bologna project will lose $10,000, whereas the caviar project will earn $20,000. During a recession, the bologna project will earn $12,000 and the caviar project will lose $8,000. If the alternative is earning $3,000 on a safe asset (say, a Treasury bill), what should the manager do? Why?