The preferences of agents A and B are representable by expected utility functions such that uA(x) = 5x^1/3 +30, and uB(x)= 1/5x - 20. Then, the following allocation of the expected returns of a risky joint investment of A and B as represented by lottery L = ((2/3);1500), (1/3);120)) is Pareto efficient: (a) xA = (500,100), xB = (1000,20) (b) xA = (100,100), xB= (1300,20) (c) xA= (80,80), xB = (1420,40) (d) xA = (750,60), xB= (750,60) (e) NOPAC
Q: The labour market in an economy is characterised by the following equations: W = 0.7-0.9u ре Wage se...
A: Wage determination in the labour market is characterized by the WS equation. There is a negative l...
Q: A binomial probability experiment is conducted with the given parameters. Compute the probability of...
A: a frequency distribution of the number of successful results that can be achieved in a specified num...
Q: Your company grant you a P 100,000 loan for personal purposes. The annual payment is P 8,880 and the...
A: Given:- Present value of loan=P 100,000 Interest rate=8% or 0.08 Afford to pay(Annual payment actual...
Q: The Slutsky matrix below belongs to a consumer with a regular utility function of three goods, with ...
A: As we know that Slutsky matrix is symmetric matrix. Therefore, By solving the metrics we can find ou...
Q: Consider a production firm whose production function has the isoquant shown in the following graph. ...
A: Given is the graph of the production firm's isoquant. The isoquant is a downward sloping curve in th...
Q: Suppose that many varieties of lettuce have been damaged in a particular season by disease. Only gre...
A: According to the question, percentage change in price of green leaf lettuce is 50% and percentage ch...
Q: Explain how the push and pull factors can affect the purchasing process.
A: Push factors are important because they help predict demand, allowing you to know future product and...
Q: 1. Suppose two nations, Beta and Gamma, each make aircraft and corn. The main resource in each natio...
A: Given: Goods: Aircraft Corn Note: Due to multiple subparts being posted, the first three subparts ha...
Q: Accrual income versus cash flow for a period The Motor Corporation sold vehicles for $500,000 to one...
A: Accrued income is cash that is been earned however has nevertheless to be received. Mutual funds or ...
Q: You own a printing firm. Two of your senior managers provide you with advice. The first manager stat...
A: The supply curve shows the association between the price of commodity and quantity of the commodity ...
Q: The short run ASTI curve showing the relationship between inflation rates and: Central bank monetary...
A: The short run Aggregate supply curve is upward sloping which reflect that the producers are willing...
Q: Describe one type of negative market externality with a forest as it relates to climate change. Expl...
A: a) Environmental or forest related externalities, such as natural resources or public health, are ex...
Q: Question 39 Consider the table below. The addition of worker number is when the firm first experienc...
A: Answer 39) The figure attached below computes the total product at labor 3 by adding total product a...
Q: In the context of the monetary approach to the determination of the exchange rate, what is the effec...
A: A money supply curve is the supply of currency in an economy. The supply of money depends upon the i...
Q: Over the years, you have accumulated a good amount of money in your 401k, traditional IRA and Roth I...
A: The correct ranking from best to worst is Roth IRA, Traditional IRA and 401k.
Q: Mohammed Muhsen invested 17 years of his life in developing the World Bank’s international knowledge...
A: The World Bank, often known as the World Bank Group, is an international financial institution affil...
Q: A university planner is interested in determining the percentage of spring semester students who wil...
A: Size of pilot sample = 160 Number of students who return to summer school =48 Confidence level =95%
Q: How does SAT performance influence occupational andeconomic achievement?
A: SAT scores have a positive relationship with economic achievement. A higher SAT scores means a high...
Q: You are the President and the nation is slipping into recession. Using the Keynesian AD/AS theories...
A: In Keynesian school of thought, government intervention is needed to fix the problems or disequilibr...
Q: Assume that the demand for food is relatively inelastic and the demand for jewelry is relatively ela...
A: Answer: If the same tax is imposed on the goods having elastic and inelastic demand then the good wi...
Q: dump truck bought for P900,000 six years ago. It will have a salvage value of P100,000 two years fro...
A: Dear Student, as you have posted multiple questions but according to our policies and guidelines we ...
Q: Distinguish the difference between nominal GDP and real GDP
A: GDP (gross domestic product) is the total value of goods & services manufactured in an economy d...
Q: You are a manager of an advertising company. The company is running short of funds, so you decide to...
A:
Q: Demarcus is planning to purchase a piece of property that he anticipates will cost $455,000 in 6 yea...
A: Given, Future Value= $455000 Rate of interest= 7% Time= 6 years
Q: Prie ee AD AD Heal GDP FIGURE 23-4 Refer to Figure 23-4. Suppose the Canadian economy is initially i...
A: Answer -
Q: Find the second-order partial derivatives. (a) f(x, y) = x2 + 4xy + y3 fxx = fyー fxy = (b) f(x, y) =...
A:
Q: In Norway, one worker can produce either 8 pounds of smoked fish or 8 barrels of oil. In Saudi Arabi...
A: Given:- Production in Norway=8 pound of fish or 8 barrels of oil Production in Saudi Arabia=5 pound ...
Q: What are the four stages of the business cycle? Describe each stage.
A: Business cycle refers to ups and downs of the economic activityies.
Q: al producer and 10 million tons are imported. The steel producer produces 10 million tons of steel a...
A:
Q: You believe that a corporation's dividends will grow 5 percent on average into the future. The corpo...
A: The information given is:- Dividend paid per share = $5 Current price of stock = $75 Average growth ...
Q: Consider the following open economy: C = 40 + 0.85x YD I = 1500 G = 1600 X = 240 M = 0.12x Y TR = 10...
A: C = 40 + 0.85*YD Differentiate C w.r.t YD to get MPCD MPCD = dc / dYD => MPCD = 0.85 ------------...
Q: The diagram below shows a monopolist’s marginal cost schedule and the demand curve. Find and depict ...
A: we have:
Q: Assume an economy in which only broccoli and cauliflower are produced. In year 1, 500 million pounds...
A: GDP deflator and CPI are both measures of inflation. GDP deflator measures changes in price keeping ...
Q: Which of the following is an assumption of the theory of oligopoly? O Firms produce and sell either ...
A: Goods are differentiated when there is a difference in packaging, taste, or any other characteristic...
Q: Use the following information to answer the next question: Consider the following figures that repre...
A: Here, four different graphs are showing markets with externality due to which government provides su...
Q: the existing recessionary gap. If the central bank does not change the interest rate, p. will adjust...
A: If the price of crude oil increases and a country produces just enough crude oil for their own consu...
Q: Explain in detail the importance of pm and qmin graphic above, what happens and why it happens withi...
A: The equilibrium refers to the economic condition where the demand and supply are equal. The demand i...
Q: How can the business sector affect the economy
A: Business Sector of the economy involves manufacturing, production, buying and selling of products an...
Q: If the United States introduces universal child care, what will likely happen to GDP? Explain fully ...
A: Universal child care is the provision of child care facilities like health care, education, nutritio...
Q: If the input cost adjustment process works very slowly so that actual output differs from potential ...
A: Actual output refers to growth that has occurred in real life, whereas potential output refers to th...
Q: 40 36 Demand 32 28 24 20 16 12 4. 2 3 4 5 6 10 QUANTITY (Thousands of large boxes) In the following ...
A: Output (Q) Price (P) Total Revenue (P*Q) Marginal Revenue (TRn - TRn-1) Average Revenue (TR/Q) 0 2...
Q: Which of the following will affect our debt-to-GDP ratio? O a. Government expenditures O b. GDP grow...
A: Debt to GDP ratio is the ratio between the total debt of a country and its GDP. The lesser the ratio...
Q: Suppose real GDP is $5,361 billion, taxes collected by the government are $528 billion, government s...
A: Use the below formula: Real GDP = C + I + GC = Consumption ExpenditureI = Investment ExpenditureG = ...
Q: . Which of the following are determinants of aggregate demand? Choose all that apply. A. a spike in ...
A: Answer: Determinants of aggregate demand: the determinants of aggregate demand refer to the factors ...
Q: Ben produces chemical compounds that sell for $500 in the market. This production process generates ...
A: The given information is:- Price of chemical compounds in market = $500 Price for professional waste...
Q: efer to the above table . The model will produce ( operate ) in which of the following outcomes : O ...
A: Answer is given below
Q: Explain briefly what the consumer price index tries to measure?
A: The CPI is a weighted average of prices for various consumer goods and services, such as transportat...
Q: Use the figure to select all the correct statements. B Q1 Q2 Q3 Q4 Q5 Q6 DA. The distance between Cu...
A: Answer -
Q: Lucy's company has just promoted her to a managerial position and given her a new office. She is ver...
A: U=sqrt(XY) U1=4 U2=6 U=sqrt(XY) Where, X is for carpets and Y is for the paintings. when U=4 and U...
Q: 9. Consider a no-trade-to-free-trade liberalization with a pro-competitive effect and the expected t...
A: Since the question you have posted consists of multiple parts, we will answer the first two parts fo...
The preferences of agents A and B are representable by expected utility
functions such that uA(x) = 5x^1/3 +30, and uB(x)= 1/5x - 20. Then, the
following allocation of the expected returns of a risky joint investment of A and
B as represented by lottery L = ((2/3);1500), (1/3);120)) is Pareto efficient:
(a) xA = (500,100), xB = (1000,20)
(b) xA = (100,100), xB= (1300,20)
(c) xA= (80,80), xB = (1420,40)
(d) xA = (750,60), xB= (750,60)
(e) NOPAC
Step by step
Solved in 2 steps
- Player 1 and Player 2 have formed a partnership (e.g., a law firm). Suppose both players simultaneously invest some effort and split the joint return equally. Let x and y denote the amounts of effort that Player 1 and Player 2, respectively, invest. This will result in a disutility of x²/2 for Player 1 and a disutility of y2/2 for player 2. However, it will result in a joint return of (x+y) which the players split evenly. a) Left to their own devices, what effort levels will the players' choose? Show calculations. b) What is the efficient effort levels? Show calculations. c) Why isn't the efficient effort levels achieved when the player's are left to their own devices? How could the partnership attempt to address this issue? d) Relating it to a law firm, what would you expect to happen to effort levels as the number of partners at a law firm increases? What are possible explanations as to why the average size of a law firm has increased significantly in recent years?Two players play the following game for infinite times. For the player to continue to cooperate what would be the ranges of their discount factor, δ_1 and δ_2, respectively? cooperate betray cooperate (10,20) (-25,30) betray (15, -22) (-12, -18)Players 1, 2, and 3 are playing a game in which the strategy of player i isdenoted yi and can be any nonnegative real number. The payoff function for player 1 is V1(y1,y2,y3) = y1 + y1y2 - (y1)2,for player 2 is V2(y1,y2,y3) = y2 + y1y2 - (y2)2,and for player 3 is V3(y1,y2,y3) = (10 - y1 - y2 - y3)y3.These payoff functions are hill shaped. Find a Nash equilibrium. (Hint: Thepayoff functions are symmetric for players 1 and 2.)
- A recently discovered painting by Picasso is on auction at Sotheby's. There are two main bidders Amy and Ben {1,2}. Bidding starts at £10M but the value of the painting is certainly not more than £20M. Each bidder's valuation v; is independently and uni- formly distributed on the interval [10M, 20M], and this is common knowledge among the players: A bidder knows their own valuation but not of their opponent. Consider an auction where an object is allocated to the highest bidder but the price paid by the bidder is determined randomly. With probability 3/4, the bidder pays their own bid, and with probability 1/4 the bidder pays the losing bid. The person bidding lowest pays nothing. If the bids are equal, each bidder gets the object with probability one-half, and in this case, pays their bid. Suppose that bidder 1 assumes that bidder 2 will bid a constant fraction, 7, of bidder 2's valuation (and similarly, bidder 2 assumes bidder 1 will bid the same constant propor- tional value of…There are three bidders participating in a first-price auction for a painting. Each bidder has a private, independent value vi for such a painting that is drawn uniformly from [0,1] Assume that each bidder i has a linear bidding function bi=avi, where a>0. What is the bidding strategy of bidder i , namely bi in the Bayesian equilibrium?(ii) A mixed strategy profile (p, q) is one in which p = (p,P2.... P) is the mixed strategy of player 1, and q- (g1, q2,..q4) is the mixed strategy of player 2. Show that if p, >0 in a Nash equilibrium profile (p*, q*), the player 2 must also play i with strictly positive probability q'; > 0. (State clearly any theorem you use to show this. You are not required to justify the theorem.) %3D
- A risk-neutral consumer is deciding whether to purchase a homogeneous product from one of two firms. One firm produces an unreliable product and the other a reliable product. At the time of the sale, the consumer is unable to distinguish between the two firms’ products. From the consumer’s perspective, there is an equal chance that a given firm’s product is reliable or unreliable. The maximum amount this consumer will pay for an unreliable product is $0, while she will pay $100 for a reliable product. a. Given this uncertainty, what is the most this consumer will pay to purchase one unit of this product? b. How much will this consumer be willing to pay for the product if the firm offering the reliable product includes a warranty that will protect the consumer? Explain.Redo the problem in Question 2 under the assumption that the person has utility function u(c) = ln(c) (instead of u(c) = √C). The other parameters are the same as those used in Question 2. How the solution found in Question 2 will change? Q2: A person has wealth of $500,000. In case of a flood her wealth will be reduced to $50,000. The probability of flooding is 1/10. The person can buy flood insurance at a cost of $0.10 for each $1 worth of coverage. Suppose that the satisfaction she derives from c dollars of wealth (or consumption) is given by u(c) = √c. Let CF denote the contingent commodity dollars if there is a flood (horizontal axis) and CNF denote the contingent commodity dollars if there is no flood (vertical axis). (a) Determine the contingent consumption plan if she does not buy insurance. (b) Determine the contingent consumption plan if she buys insurance $K. (c) Use your answer in (b) to eliminate K and construct the budget constraint (BC) that gives the feasible contingent…Redo the problem in Question 2 under the assumption that the person has utility function u(c) = ln(c) (instead of u(c)=√C). The other parameters are the same as those used in Question 2. How the solution found in Question 2 will change? Q2: A person has wealth of $500,000. In case of a flood her wealth will be reduced to $50,000. The probability of flooding is 1/10. The person can buy flood insurance at a cost of $0.10 for each $1 worth of coverage. Suppose that the satisfaction she derives from c dollars of wealth (or consumption) is given by u(c) = √c. Let CF denote the contingent commodity dollars if there is a flood (horizontal axis) and CNF denote the contingent commodity dollars if there is no flood (vertical axis). Determine the contingent consumption plan if she does not buy insurance. 1 2 Assume that the person has von Neumann-Morgenstern utility function on the contingent consumption plans. Write down the expected utility U(CF, CNF) and derive the MRS. Solve for optimal (CF,…
- (b) Assume that utility U is a function of wealth X given by U = X.5 and that X = $1,000,000. In this part of the question, assume that the game ends if the first head has not occurred after 40 tosses of the coin. In that case, the payoff is 240 and the game is over. What is the expected payout of this game?Suppose you have an exponential utility function given by U(x) =1- exp(-x/R) where, for you, R = 1000. Further, suppose you have an investment with a 50/50 chance of returning either 0 or 2000 dollars. Note U(0) = 0 and U(2000) = 0.865, so the utility of the lottery is 0.432. What is the certain equivalent of that investment?The mixed stratergy nash equalibrium consists of : the probability of firm A selecting October is 0.692 and probability of firm A selecting December is 0.309. The probability of firm B selecting October is 0.5 and probability of firm selecting December is 0.5. In the equilibrium you calculated above, what is the probability that both consoles are released in October? In December? What are the expected payoffs of firm A and of firm B in equilibrium?