Suppose the two countries can trade shares in the ownership of their perspective assets. Further assume that a Home owner owns a 25 percent share in Foreign land. He will receive 25 percent share in Foreign land and thus receives 25 percent of the annual Foreign kiwi fruit harvest. Further assume also that a Foreign owner of a 25 percent share in Home land is permitted. In this case, a Foreigner is entitled to 25 percent of the Home harvest. The expected value of kiwi fruit for each investor is O a. 100 Оь. 25 О с. 75 O d. 50 O e. 125
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- V4. Assume there are only two oil producing countries in the world, C1 and C2. Each can export either 2 million or 4 million barrels of oil. If a total of 4 million barrels of oil are exported (both countries combined) then each barrel sells at $25. If there are 6 million barrels exported between them, each barrel sells at $15 and if there are 8 million barrels exported between them, then each barrel sells at $10. a) Write the “pay-off” matrix/table (i.e., the table or matrix indicating the strategies for each country, i.e., the amount of barrels they export and the revenue they make). b) Determine the Nash equilibrium for the game. c) Is there a strategy that results in larger revenue for both the countries? If so, which is that? d) For what wegitage for future payoff, δ, will both countries agree to use the strategy that benefits both of them, better?Consider a random-relocation economy where each young person receives 10 units of the consumption good. There are 100 young people born each period. The total stock of money is constant and equal to $500. The consumption good can be transformed, one to one, into capital, which will give a return of x > 1 next period. Suppose a personís preferences are such that they want to consume 1/2 of their endowment when young 2 of ECON20532 and 1/2 when old. They all dislike risk. We also assume that the probability that a person is relocated is 10% (known to everybody) and the gross return on capital is 1.1. A person is notifed whether she needs to relocate or not at the end of period 1. A person who relocates can take with her money, but not capital. Individual agents cannot invest directly in capital, but there exists a (perfectly competitive) banking sector that accepts deposits from all young people. (a) What is the state contingent rate of return o§ered by banks on deposits? (b) Write…Assume the relationship between the growth of a fish population and the population size can be represented as g= 8S – 0.2S2, where g is the growth in tons and S is the size of the population (in thousands of tons) a. Given a price of $100 a ton of fish, what is the marginal benefit of smaller population sizes? b. Estimate the population size that is compatible with the maximum sustainable yield. What would be the size of the annual catch if the population were to be sustained at this level? c. If the marginal cost of additional catches (represented in terms of the population size) is MC= 3(120-S), what is the population size that is compatible with the efficient sustainable yield? d. Is there a difference between the maximum sustainable yield you calculated in part (b) and the efficient sustainable yield in part (c)? Why or why not? Explain briefly (in 1 paragraph or less)
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- Assume Person A is offered the following game: If they want to participate in the game, theywill need to pay £5. If they participate, they can choose between Option A and Option B.Option A consists of spinning a roulette wheel with 37 different numbers (18 red, 18 black,and 1 green). If the outcome is red, the participant receives £10 and £0 otherwise. Option B isa fair coin flip that yields £5 when heads comes up and £10 when tails comes up.(a) What is the expected value of Option A?(ii) What is the expected value of Option B?(iii) What is the expected value of participating in the game and choosingOption A?(iv) What is the expected value of participating in the game and choosingOption B?(v) How much would the game need to cost to make it a fair game when youchoose Option A?(vi) How much would the game need to cost to make it a fair game when youchoose Option B?(b) Person A chooses to participate in the above described game. Which of thefollowing options can be true regarding…Adam is considering what skills to study in online school. Her utility function is based on the income she earns, and is defined by U(I) = I0.8. If she learns the skill of SPSS, she will earn $145,000 per year with probability 1. If she learns the skill of Tableau, she will earn $300,000 per year with probability 0.6 (assuming that she gets the certificate) and $30,000 with probability 0.4 (if she learns without earning a certificate and she has to find a waiter job). a. Is she risk averse, risk neutral, or risk loving? Explain.b. Write out the equation for her expected utility for each skill. c.Which skill will she learn? Show your work. d.Suppose someone offers her insurance for the possibility that she does not get a Tableau certificate. This insurance will provide her an amount of income in addition to the waiter job wages that makes her indifferent between learning SPSS and Tableau. What is this amount, and what is the cost of the insurance? (note: many possible answers)"Mary is in contract negotiations with a publishing house for her new novel. She has two options. OPTION 1: She may be paid $90000 up front, and receive royalties that are expected to total $30000 at the end of each of the next 6 years. Alternatively, OPTION 2: she can receive $100000 up front and no royalties. Which of the following investment rules would indicate that she should take Option 1, given a discount rate of 5%? Rule I: The Net Present Value rule; Rule II: The Payback Rule with a payback period of 2 years.