Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 5, Problem 2E
To determine
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Consider a worker who is offered a salary bonus of $2,000 for each of the next two years if he or she enrolls in a job training program this year. The total cost to the worker, including any forgone earnings, is $3,000.
(1). What is the internal rate of return on this investment?
(2). Would this be a good investment for someone with a discount rate of 9%? Why?
Please show your solution process and explain.
All of the following will cause a shift in the demand curve for capital EXCEPT:
A change in sales expectations.
the interest rate.
changes in labor prices.
technological change.
How do the strategic asset allocations of investors with and without income from labour differ?
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- Explain why the optimal stock of capital chosen by firms is such that the marginal productivity of capital is equal to one plus the real interest rate.arrow_forwardConsider the Two-Period Endowment Model of the Household studied in class. Suppose that optimal consumption period is given by: where ωe is the household's lifetime wealth (after taxes). Is the optimal consumption behaviour implied by (1) consistent with the Permanent Income Hypothesis? Why?arrow_forwardTrue or False: Employee compensation in the form of health insurance is currently subject to personal taxation, making it less desirable for people to get health insurance provided by their employer and more desirable for them to purchase it from a private insurance company.arrow_forward
- Ehat is the maximum amount you would pay for an asset that generates an income of P250,000 at the end of each of five years if the opportunity cost of using funds is 8%?arrow_forwardConsider an infinitely lived agent who has one unit of a commodity and she consumes it over lifetime. The commodity is not perishable and she receives no dividend or interest on saving. Consumption of the commodity in period t is denoted Xt. Let the lifetime utility function be given by: u(x0, x1,...,) = Σ B^t (ln Xt).[Limit 1 to infinity]. Here, 0 < B < 1. Compute the consumer’s optimal consumption level for each period.arrow_forwardWhy in the long run the rate of return on investments reflects the riskiness of those investments?arrow_forward
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