. Changes in incentives Suppose the large number of bike accidents in a small town results in new legislation that requires all citizens of the town to wear s nelmets when riding. These new helmets reduce the probability of head trauma by 25% during a bike accident. While the new helmets the probability of a serious head injury resulting from a bike accident, they also incentivize cy

. Changes in incentives Suppose the large number of bike accidents in a small town results in new legislation that requires all citizens of the town to wear s nelmets when riding. These new helmets reduce the probability of head trauma by 25% during a bike accident. While the new helmets the probability of a serious head injury resulting from a bike accident, they also incentivize cy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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14 of 17 Attractive conditions in America such as better wages, new technology, and bigger living quarters that would cause one to immigrate to the United States are known as Opull factors. Oliabilities. Ⓒassets. Ⓒpush factors Previous Q Search - 0 2
1. Mel is thinking of going on a cruise. Mel values a cruise in nice weather at $2,000 and values a cruise in bad weather at $50. The probability of nice weather is 60 percent and the probability of bad weather is 40 percent. Trip insurance is sometimes available. If purchased, it allows travelers to delay the cruise until the weather is nice. Suppose that the price of the cruise is $1,200. If Mel is risk-neutral, then Mel should: not buy trip insurance. only buy trip insurance if it costs less than $780. only buy trip insurance if it costs less than $20. only buy trip insurance if it costs less than $50. 2. Several web sites, like Pricewatch.com, allow consumers to input the name of a product, and the site then returns a list of suppliers with their respective prices for the product. This: increases the benefit of search.. increases the free-rider problem. reduces the benefit of search. reduces the cost of search.
1. Now, imagine that Port Chester decides to crack down on motorists who park illegally by increasing the number of officers issuing parking tickets (thus, raising the probability of a ticket). If the cost of a ticket is $100, and the opportunity cost for the average driver of searching for parking is $12, which of the following probabilities would make the average person stop parking illegally? Assume that people will not park illegally if the expected value of doing so is negative. Check all that apply. A. 9% B. 18% C. 17% D. 10% 2. Alternatively, the city could hold the number of officers constant and discourage parking violations by raising the fine for illegal parking. Suppose the average probability of getting caught for parking illegally is currently 10% citywide, and the average opportunity cost of parking is, again, $12. The fine that would make the average person indifferent between searching for parking and parking illegally is ____ , assuming that people will not…
Who is most risk-averse? a-an individual with slightly diminishing marginal utility. b-all individuals are equally risk-averse. c-an individual with rapidly diminishing marginal utility. d-an individual who does not experience diminishing marginal utility.
those determinations. Respond to the following questions in a minimum of 175 words: . Consider a situation that you might need to use your understanding of probability to make an informed decision. • What sorts of information would you collect? • How might you use what you have learned about probability to determine a course of action? What are the possible benefits and limitations of this approach? Due Monday Reply to at least 2 of your classmates. Be constructive and professional in your responses. Copyright 2020 by University of Phoenix. All rights reserved. New Group 1 17 Responses 33 Replies
. If you examine the decision tree in Figure 9.12 (orany other decision trees from PrecisionTree), you willsee two numbers (in blue font) to the right of each endnode. The bottom number is the combined monetaryvalue from following the corresponding path throughthe tree. The top number is the probability that thispath will be followed, given that the best strategy isused. With this in mind, explain (1) how the positiveprobabilities following the end nodes are calculated,(2) why some of the probabilities following the endnodes are 0, and (3) why the sum of the probabilitiesfollowing the end nodes is necessarily 1.
An insurance company estimates that drivers have a 5% chance of getting into an accident that will cost the driver $10,000. There are two types of drivers: the ones with $50,000 in the bank and the ones with only $5,000. In case of an accident those with $5,000 will declare bankruptcy and creditors can only recover $5,000. What is the fair pair of insurance and will those with $5,000 in the bank buy it? Why?
TRUE/FALSE One reason that tax revenue may fall when tax rates are increased is due to tax evasion, that is, the higher the tax rate, the higher the probability of the tax evasion and thus, lower tax revenue. The example I used was when Canada quadrupled the tax rate on cigarettes Canadian citizens sought out to buy illegally smuggled in US cigarettes to evade the tax on Canadian cigarettes.
6. Most Bengal tigers (Panthera tigris) are orange with black stripes. Occasionally, however, they can be white with black stripes. The white phenotype is recessive to orange. In one study, a white and an orange tiger were bred in a zoo. These 2 tigers eventually bad 10 offspring: 4 white and 6 orange. What are the genotypes of the two parents? 6. If the orange tiger from the previous question is crossed with one of its orange offspring, what is the probability of obtaining a white tiger from the cross? 7. In snapdragons, a species of plant, red flower color is incompletely dominant over white, the heterozygotes being pink. If you want to produce seed that will yield only pink flowering plants, what would you cross? 8. George has type A blood and his wife Harriet has type B blood. They have a daughter with type O blood. What is the probability that their next child will have type AB blood?
1. Mr. Smith can cause an accident, which entails a monetary loss of $1000 to Ms. Adams. The likelihood of the accident depends on the precaution decisions by both individuals. Specifically, each individual can choose either "low" or "high" precaution, with the low precaution requiring no cost and the high precaution requiring the effort cost of $200 to the individual who chooses the high precaution. The following table describes the probability of an accident for each combination of the precaution choices by the two individuals. Adams chooses low precaution Adams chooses high precaution Smith chooses low precaution Smith chooses high precaution 0.8 0.5 0.7 0.1 1) What is the socially efficient outcome? For each of the following tort rules, (i) construct a table describing the individuals' payoffs under different precaution pairs and (ii) find the equilibrium precaution choices by the individuals. 2) a) No liability b) Strict liability (with full compensation) c) Negligence rule (with…
Urgently need Suppose that a lottery ticket costs $10 and the prize is $1000. If you win the lottery you receive $1000, if you do not win you receive $1 for consolation prize. What does the probability of winning need to be for this lottery to be actually fair, that is, for its price to equal its expected value? Please answer the question with work and details. This is a behavirol economics question