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- Jason Stilton is the chief executive officer of RightLiving a company that buys life insurance policies at a discount from terminally ill persons and sells the policies to investors for 85% of the value of the future benefit. The patients recieve the cash to use for medical and other expenses and the investors are guaranteed a positive return on thier investment. The diffreance between the purchace and sale prices is the RightLivinf Profit. Stilton is aware that some sick patients may obtain insurance policies through fraud (Not revealing thier illness on the insurance application). An insurance company that discovers such will cancel the policy and refuse to pay. Stilton beleives that most of the policies he has purchased are legitimate, but he knows some are probably not. Question Using IDDR approch, discuss the decision process Stilton should use in deciding whether to disclose the risk of fraudulent policies to potential investors.An individual’s utility function is given by where is the amount of leisure measured in hours per week and is income earned measured in cedis per week. Determine the value of the marginal utilities, when = 138 and = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?Q) Suppose that utility for a worker is u(w)=w^.5. If the wage (w) offered is $64, there is a 50% chance of being fired, and switching costs are $28. What is the expected utility for the worker? Explain it early
- the agent has a maximum of 12 hrs in a day that she can work, and her aspiration is not a utility level, but a target of making at least $500 in a work day. Her utility from working q hours at an hourly rate w is given by wq - q2(so she likes total income but dislikes working). If her target is not achievable, then she just max imizes her utility. If the target level of income is achievable, then she chooses any feasible number of hours that yield at least her target income. Formulate the model by doing the following (warning: (i) and (ii) require care): (i) Specify the choice domain. (ii) Write the agent's menu when the hourly rate is w. (iii) Determine the agent's choice from menus corresponding to wages $22/hr and $50/hr respectively.2 (iv) Point out how the choices relate to the finding in the study.Suppose the average age of Stanford Alumni increased at the same time the smaller stadium was built and the income elasticity of ticket sales is .5 Group of answer choices Tickets are an inferior good. If income increases with age, it is more likely the smaller stadium will increase total revenue because any increase in ticket revenue from the increase in prices will be reinforced by an increase in ticket sales from the higher income of Stanford Alumni. If income increases with age, it is less likely the smaller stadium will increase total revenue because any increase in ticket revenue from the increase in prices will be offset by a decrease in ticket sales from the higher income of Stanford Alumni.1) John is operating an internation business in the United Stateds of American and is focused on the limitation or short-term impact of an issue. It can be said that John has a ............. 2) The grestest good for the greatest number of persons is known as the ............... approach. 3) this theorgy states that a country's wealth was deternmined by the amount of its gold and silver holding. It is ...........?
- The demand x is the number of items that can be sold at a price of $p. For x = p" - 3p° + 1500, find the rate of change of p with respect to x by differentiating implicitly. The rate of change of the price p with respect to the demand x isGenerally speaking the demand for a good will be more inelastic O if the good is very specific and narrowly defined. O the greater the time period being considered. O if the good is a luxury. O if the good makes up a small part of an individual's budget. 21 ttv MacBook Pro F8 F9 F7 D00 F4 F6 F5 F3Consider the market for a single network good and suppose thatconsumers differ in their valuation of both the stand-alone and thenetwork benefits (it can indeed be argued that it is more plausiblethat a user who has a higher value for the stand-alone component of atechnology also assigns more importance to the size of its network.) Tocapture this idea, write the consumer’s utility function for joining thenetwork as U(θ) = θ(a + νne), where a is the stand-alone benefit, ν > 0measures the network effect, neis the expected number of users joiningthe network, and is uniformly distributed on the unit interval.a. What happens if p > a + νne? (Hint: Identify all consumer who buythe good for at price p and a given expected network size ne).b. What is the consumer’s willingness to pay for the nth unit of thegood when ne units are expected to be sold? Is the demand downwardsloping? Does the demand increase with the expected network size?c. Express the fulfilled-expectations demand curve…
- The economy is populated by 100 agents. Each agent has to divide 1 unit of timebetween work and leisure given the wage rate w paid on the labor market. In additionto the salary, he or she also receives dividend a income of π = Π/100 (the total profitof the firms Π is distributed equally among all the consumers in form of dividends)Suppose that the government does not incur expenditures, so G=0.The agent’s utility function depends on consumption (c) and leisure (l), and it is assumedto satisfy u(c, l) = 0.5 ln(c) + 0.5 ln(l). On the other side of the market, there arefirms who hire workers and produce output. The representative firm operates witha Cobb-Douglas production technology Y = zK^0.5N^0.5, where z denotes the totalfactor productivity, and K = 100 is a fixed amount of capital. Each of the firm’semployees receives wage w, i.e. the total labor cost of the firm is equal to wN^dSuppose that initially z = 1 (so the competitive equilibrium is the one we calculatedin class), but the…Which of the following preference doesn't satisfy monotonicity? O Quasilinear preference O Perfect substitutes preference Bads O Cobb-Douglas Preference2. Consider a product market with a supply function Q = Bo + Bị Pi + u, a demand function Q = Yo + u, and a market equilibrium condition Q = Q, where u and u are mutually independent i.i.d. random variables, both with a mean of zero. You have a data set of (P, Qi) in equilibrium. a. Show that P; and u are correlated. b. Show that the OLS estimator for 31 is inconsistent.