Questions 1.4 and 1.5 refer to a consumer with preferences over food (x) and clothing (y) represented by the utility function u(x, y) = xy, and whose monetary income in 2018 was I = 2. In 2018 prices were (p2018, p2018) (1, 1), and in 2019 they are (p2019, p2019) = (4,1). hand written plz 1.4. The true consumer price index of this individual is 01 ☐ 1.5 风 2 ☐2.5. 1 1.5. The consumer price index of this individual calculated as a Laspeyres index is 01 1.5 2 ☑ 2.5.
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- How would the price of the bond be affected by changing the going market interest rate? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. That is an oversimplification, but assume it anyway for purposes of this problem.)"The non-liner transformation of the vNM expected utility function fails to reflect the underlying preference relation." Explain the above statement.Demand for Orange Juice is given as Qd = 5000 – 2500 P + 1200 I + 650E – 255 Ps Suppose Income is I = Rs.500, Expectations E = 55, and Price of Ps = Rs 25. Find the Demand Equation. Using the demand function from part a., Calculate Elasticity of Demand for price range of Rs.125 and Rs.155. What will be the ‘Price Elasticity of Demand’ at P = Rs.125? Interpret the Elasticity of Demand calculated in (C) above.
- Demand for Orange Juice is given as Qd = 200 – 300 P + 120 I + 65 T – 250 Pc + 400 Ps Suppose Income is I = $10, Expectations T = 60, Price of Pc = $15 and Ps = $10. Find the Demand Equation. Using the demand function from part a., Calculate Elasticity of Demand for price range of $10 and $11. What will be the ‘Price Elasticity of Demand’ at P = $10? Interpret the Elasticity of Demand calculated in (C) above.As a manager of a small software retailing company, you are concerned with projected profit next year. While profit can be determined as the difference between sales and maintenance cost, or in symbols, P = S - M, where P is profit, S is sales, and M is maintenance cost including technical support. It is argues that when sales goes up so does maintenance cost because the cost of technical support will go up. Further, it is measured that the correlation between S and M is 0.8. Now given the figure that sales next year is expected to be $300 thousand with standard deviation of $4 thousand and maintenance cost is expected to be $150 thousand with standard deviation of $6 thousand, what would be the expected profit and its standard deviation you will include in your report?The manager of a hockey arena is pricing tickets for an upcoming game. She knows that if she increases the ticket price she will sell fewer tickets. The situation is modelled by the relation, R = -88.9p^2 + 2667p, where R is the total revenue and p is the ticket price, both in dollars. The graph is given.
- Demand for Orange Juice is given as Qd = 5000 – 2500 P + 1200 I + 650 E – 255 Ps Suppose Income is I = Rs.500, Expectations E = 55, and Price of Ps = Rs 25. Find the Demand Equation. Using the demand function from part a., Calculate Elasticity of Demand for price range of Rs.125 and Rs.155. C.What will be the ‘Price Elasticity of Demand’ at P = Rs.125? D.Interpret the Elasticity of Demand calculated in (C) aboveA parent has two children named A and B and she loves both of them equally. She has a total of Php 1,000 to give them. How much will she give to each child given the different utility functions: a) U(a,b)= √a+√b b) U(a,b)=(−1/a) - (-1/b) c) U(a,b)=log(a)+log(b) d) U(a,b)=max(a,b) e) U(a,b)=min(a,b)EXPECTED UTILITY THEORY • Goal utility and goal difficulty are combined to determine goal selection according to expected utility theory according to this theory, the goal that is selected is based on its utility and estimated probability of being achieved. Utility refers to the usefulness of the goal in providing satisfaction or happiness • Expected utility = Utility × subjective probability . Question- Explain what you understand from this theory above and give an example of how it can be useful .
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