Question 1 lemons. The sellers and buyers have the following valuations for the cars. There are 100 used cars whose owners might want to sell them: 80 are plums and 20 are Lemons Plums Seller's value 12,000 15,000 22,000 25,000 Buyer's value The sellers know whether their car is a plum or a lemon, but the buyers do not. The buyers are assumed to know (a) the fraction of lemons in the population of cars and (b) whether the plums are being offered for sale at the prevailing price. (i) Explain why the owners of plums may decide not to sell their cars.? (ii) Suppose that both lemons and plums are offered for sale by their owners. Is there a market clearing price at which this would be an equilibrium strategy?
Q: Suppose that there are two types of workers: high and low. Employers cannot distinguish between…
A: Two wage rates are given:- $200,000 and $100,000 for high and low type worker Reservation wages are…
Q: Lucy and Henry each have $8082. Each knows that with 0.1 probability, they will lose 85% of their…
A: Given: Lucy and Henry each have = $8082 The probability here is = 0.1 They both buy units of…
Q: QUESTION :- An insurance company would like to offer theft insurance for renters. The policy would…
A: Insurance: Insurance, in general, can be defined as a means of protecting oneself against financial…
Q: Suppose that a particular large hotel has 790 rooms. Furthermore, suppose that for weekend nights…
A: Here' the answer: The Z value is X-Mu / ( Sigma/sqrt(n)) , where n is the sample of 35 nights taken.…
Q: The time taken to complete a bicycle race is normally distributed, with an average time (μ) of 2.25…
A: The standard normal distribution is a normal distribution with a mean of zero and standard deviation…
Q: snip
A: Larger sample sizes decreases the risk of the consumer.
Q: Diego's current wealth is $800, but there is a 0.2 probability that he will lose $100. Diego is risk…
A: Given; Current wealth= $800 Probability of losing $100= 0.2 Diego is a risk neutral person.
Q: Question 1. Using the following information and the concept of 'z-score', please calculate mean.…
A: The estimations can be made according to the values given in the model. The scores can be used to…
Q: Is co-variance a measure of relative risk, or absolute risk? A relative risk, because it is linked…
A: The measure that depicts the relative risk of security with respect to other securities that tend to…
Q: ABC Explosives has purchased fire insurance for its factory. It can institute a fire prevention…
A: A deductible is an expense that an individual taxpayer or a corporation can deduct from their…
Q: A presidential election poll contacts 2,000 randomly selected people. Should the number of people…
A: The two types of random variables discrete and continuous can be described as:- A discrete random…
Q: The probability of an 60 year-old male living to 70 years old is equal to in 2019. (Art_13_07_B)…
A: Answer; Option (b)85.30% is Correct
Q: A market research firm is interested in surveying certain attitudes in a small community There are…
A:
Q: A poll commissioned by a politician estimates that t days after he makes a statement denegrating…
A: S(t) = 75(t2 − 3t + 25) / (t2+3t+25) t = 10
Q: There are two types of used cars. Sellers know the quality of their cars, but buyers do not. Sellers…
A: seller willing to sell high-quality car = 2760 seller willing to sell low-quality car = 1560 the…
Q: H3. TRUE OR FALSE Consistent extremists are a high percentage of the American population (over 20%)
A: In the United States, a typical meaning of terrorism is the precise or compromised utilization of…
Q: 1. Prevalence refers to the proportion of participants with a risk factor or disease at a particular…
A: Prevalence: - it shows the proportion of people out of the population who has a particular disease…
Q: Suppose the market for auto insurance is made of up two types of buyers: high-risk and low-risk.…
A: The willingness to pay refers to the highest price the buyer will willingly pay. The willingness to…
Q: Explain the variance version the Theorem of Coase
A: This hypothesis created by Ronald Coase. It is a legitimate and financial hypothesis concerning…
Q: university knows from historical data that 25% of students in an introductory statistics class…
A:
Q: Statistics released by the National Highway Traffic Safety Administration and the National Safety…
A: Let, The total number of drivers n = 400 We consider it success if a driver is drunk. The…
Q: Assume the annual day care cost per child is normally distributed with a mean of $9000 and a…
A: Mean(μ)=9000 Standard deviation(σ)=900
Q: A biometric security device using fingerprints erroneously refuses to admit 2 in 1,000 authorized…
A: The probability that the person was really authorized can be calculated as follows:
Q: Your employer, an insurance company, would like to offer theft insurance for renters. The policy…
A: As we answer three subparts and the question has more than 3 subparts, so we would be answering the…
Q: The accompanying table gives the outcomes and probability distribution of the number of times a…
A: The expected value tells us about the anticipated value of an event and it is computed by…
Q: The score obtained on an emotional intelligence test is normally distributed, with an average score…
A: The standard normal distribution is a normal distribution with a mean of zero and standard deviation…
Q: Use Only Handwritten work for questions in Show ALL Handwritten work for all questions in Part II to…
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…
Q: Student body elections are coming up and there are a lot of options. There are 3 candidates for…
A: In our daily life, we may come across the situation of guessing some vents or outcomes. For example,…
Q: The annual salary of the staff members in a state government agency are shown here. The first…
A: Mean salary=ΣSFΣF
Q: The results of a national survey showed that on average, adults sleep 6.9 hours per night. Suppose…
A: Given: Sleep duration (u)=6.9 Standard Deviation (σ)=1.2
Q: A biometric security device using fingerprints erroneously refuses to admit 3 in 1,500 authorized…
A:
Q: A law school is trying to gain a better understanding of the determinants of bar passage rates.…
A: P(X) - The probability with which a randomly selected graduate has received an A in Economic…
Q: A film distribution manager calculates that 9% of the films released are flops. If the manager is…
A: Given: The firm distribution manager calculates that the ratio of the film that is flopped is = 9%…
Q: A health economist is conducting the analysis and making a choice between the following two choices:…
A: The following problem has been solved as follows:
Q: The market for lemons refers to a situation where sellers are better informed than buyers about the…
A: In a market, sellers can sell two types of products, that are new and lemon, especially in…
Q: In real life it is possible that people are risk-averse in some situations, and risk-loving in some…
A: In a market, an individual is considered as a risk-averse if he is choosing an investment with lower…
Q: Assume that you are working for the Consumer Protection Agency and have recently been getting…
A: 1) There is a complaints regarding gas mileage hence we need to test if mileage has decreasd…
Q: The following table shows the number of students at a college who were offered teaching positio…
A: Given: The formula to compute the probability is: Probability=Number of favorable outcomesTotal…
Q: ?Which one of the following choices describes a problem for which an analysis of variance would be…
A: The ANOVA test is used to compare the population mean of more than 2 treatments.
Q: Consider Akerlov's lemons problem. Suppose that there are two types of used cars high-quality cars…
A: Adverse selection is a form of asymmetric information, which is an information failure caused when…
Q: Consider a market for used cars in which buyers would pay up to $18,000 for an orange (good used…
A: The information asymmetry occurs in the economy when the sellers or the buyers have more information…
Q: The primary difference(s) between the standard deviation and the coefficient of variation as…
A: The concepts and terminologies used in statistics and several quantitative disciplines are also used…
Q: The odds against Manager X settling the wage dispute with the workers are 8:6 and odds in favour of…
A:
Q: JUST ANSWER SUBPART 2 There are two individuals, Individual A and Individual B. Individual A has an…
A: In Finance, Insurance is defined as the protection from financial loss. Insurance is a form of risk…
Q: According to a 2017 Wired magazine article, 40% of e-mails that are received are tracked using…
A: Let's consider the variable X the number of emails tracked, with a binomial distribution, a…
Q: . Most Bengal tigers (Panthera tigris) are orange with black stripes. Occasionally, however, they…
A:
Step by step
Solved in 2 steps
- Suppose that there are two types of workers: high and low. Employers cannot distinguish between different types during an interview. Employers value high type at $200,000 and low type at $100,000. Employers are in a competitive market (i.e. zero profit applies). High type workers have a reservation wage of 140,000 and low type workers have a reservation wage of 80,000. Suppose that 50% of all workers are high type. The productivities, reservation wages, and the probabilities are common knowledge). What wage would the employers offer? Please explain the solution!The investor is considering how to optimally invest 1000 euros in stocks and bonds. Let's assume that the optimal decision is made based on expected utility. Suppose the investor has a utility function u(x)=ln(1+x), where x is their wealth. Let y be the proportion invested in stocks and 1−y be the proportion invested in bonds. By investing in stocks, the investor earns 1% with a probability of 39.5% and 4% with a probability of 60.5%. By investing in bonds, the investor earns a certain 2.8%. What proportion of the investment will the investor allocate to stocks and what proportion to bonds?QUESTION :- An insurance company would like to offer theft insurance for renters. The policy would pay the full replacement value of any items that were stolen from the apartment. Some apartments have security alarms installed. Such systems detect a break-in and ring an alarm within the apartment. The insurance company estimates that the probability of a theft in a year is 0.05 if there is no security system and 0.01 if there is a security system (there cannot be more than one theft in any year). An apartment with a security system costs the renter an additional $50 per year. Assume that the dollar loss from a theft is $10,000 and that the insurance company is risk neutral and the renter would be willing to pay more than the expected loss to insure against the loss of theft. For a security system to be effective the renter must turn it on whenever he or she leaves the apartment. Suppose it costs the renter $10 per year in expended effort to turn on the alarm system. What is the…
- Refer to Table 3.10.What is the joint probability of “low income” and “regular”?9 10 11 12 answer only1 Question 2. Suppose that there is one risk free asset with return rf and one risky asset with normally distributed returns, r ∼ N(µ, σ2). The investor has an expected utility maximizer with the CARA utility u(r) = −e −Ar. Write down the investor’s maximization problem of choosing α fraction of his wealth will be invested in the risky asset Find the optimal fraction of wealth that the investor will invest in the risky asset α∗Hint: Use the fact that if a random variable x is distributed normally with mean µx and variance σ2x , then for any constant α, What happens to the optimal fraction of wealth that the investor will invest in the risky asset as the risk aversion A increases? Explain the intuition behind your result.
- 6.33 Statistics released by the National HighwayTraffic Safety Administration and the National SafetyCouncil show that on an average weekend night, 1 outof every 10 drivers on the road is drunk. If 400 driversare randomly checked next Saturday night, what is theprobability that the number of drunk drivers will be(a) less than 32?(b) more than 49?(c) at least 35 but less than 47?According to a recent Wall Street Journal article, about 2% of new US car sales are electric vehicles (data from Edison Electric Institute reported by Jinjoo Lee, "Peak Oil? Not This Year. Or This Decade," January 9, 2021 pg. B12). Suppose a company has 111 employees who drive new cars (separately) to work each day. What is the probability that at least one of them will drive an electric car? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.ADVERSE SELECTIONSomet Health Insurance Company wants to sell a health insurance product for $700 permonth. There is no requirement for healthy people to have insurance coverage. Thecompany conducts a survey to see how different populations respond to the proposed cost.People with no illnesses and disabilities, generally the young and healthy, respond that theydo not spend $700 on healthcare in an entire year, and most feel they would not waste somuch money on premiums when the chance of needing surgery or expensive healthcaretreatments is so small. However, older, sicker people think that $700 per month is a greatdeal, as most of them spend far in excess of this amount on healthcare. It seems like agreat deal for them. What will happen to the costs of the health insurance if only the older, sicker peopleenroll?
- Suppose the market for auto insurance is made of up two types of buyers: high-risk and low-risk. Buyers’ willingness to pay (WTP) for auto insurance plans, and sellers’ willingness to accept (WTA) when selling plans to each type of buyer, are outlined in a photo Assume now that there is asymmetric information and that insurance companies do not knowhow risky an individual buyer is. In the face of this uncertainty, they determine that the probability that a “walk-in” is high-risk is 0.75. What is the minimum price sellers are willing to accept when selling aninsurance plan? At this price, will low- and high-risk buyers both be willing to purchase this insurance plan? Explain. Be sure the mention adverse selection in your answer. Returning to the conditions outlined in Q1, suppose that buyers of auto insurance (high- and low-risk) were offered a $1,000 subsidy to purchase coverage. This would raise their WTP by $1,000. Would the market for both insurance plans clear after the…please give answer for 10, 11, and 12P06_35.xlsx Shoe demand distribution Demand (100s of pairs) Probability 1 0.025 2 0.050 3 0.075 4 0.100 5 0.150 6 0.200 7 0.175 8 0.100 9 0.075 10 0.050 A buyer for a large department store chain must place orders with an athletic shoe manufacturer six months prior to the time the shoes will be sold in the department stores. The buyer must decide on November 1 how many pairs of the manufacturer’s newest model of tennis shoes to order for sale during the coming summer season. Assume that each pair of this new brand of tennis shoes costs the department store chain $65 per pair. Furthermore, assume that each pair of these shoes can then be sold to the chain’s customers for $90 per pair. Any pairs of these shoes remaining unsold at the end of the summer season will be sold in a closeout sale next fall for $20 each. The probability distribution of consumer demand for these tennis shoes during the coming…