A and B are both currently single. They are deciding whether or not they should get married and among other things are considering the effect that marriage will have on the quantity of home commodities that they can produce. y of While single, A and Beach face the following budget and time constraints: BC: x = wh TC: 1+h = 1 where h is market hours, w is the market wage and there is a time endowment of 1 unit. If A and B marry, they will face the following budget and time constraints: BCM x = xA + XB = waha+ wghB TC: 1A +hA = I TC: ta + hA = 1 where the superscript M stands for 'married. Now consider, A has a higher market wage than B does: wA = 4wB . B specializes in home production. In the above scenario, the expression for the production function z in terms of wg and t is O 4wa (2 -1)1 Sw (2 – 1)1 O 4wn (2 +1) O 4wa (2 -1)
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- Neha and Lorenzo need to decide which one of them will take time off from work to complete the rather urgent task of digging postholes for their new fence. Neha is pretty good with a post auger; she can dig the holes in 30 minutes. Lorenzo is somewhat slow; it takes him 5 hours to dig the holes. Neha earns $110 per hour as a personal trainer, while Lorenzo earns $25 per hour as a clerk. Keeping in mind that either Neha or Lorenzo must take time off from work to dig the holes, who has the lower opportunity cost of completing the task? a) Neha and Lorenzo face identical opportunity costs b)Neha C)LorenzoJulia and Ralph need to decide which one of them will take time off from work to complete the rather urgent task of pruning their trees. Julia is pretty good with a pole saw; she can prune the trees in 1 hour. Ralph is somewhat slow; it takes him 6 hours to prune the trees. Julia earns $120 per hour as a business consultant, while Ralph earns $15 per hour as a lifeguard.Keeping in mind that either Julia or Ralph must take time off from work to prune the trees, who has the lowest opportunity cost of completing the task?You and a coworker are assigned a team project on which your likelihood or a promotion will be decidedon. It is now the night before the project is due and neither has yet to start it. You both want toreceive a promotion next year, but you both also want to go to your company’s holiday party that night.Each of you wants to maximize his or her own happiness (likelihood of a promotion and mingling withyour colleagues “on the company’s dime”). If you both work, you deliver an outstanding presentation.If you both go to the party, your presentation is mediocre. If one parties and the other works, yourpresentation is above average. Partying increases happiness by 25 units. Working on the project addszero units to happiness. Happiness is also affected by your chance of a promotion, which is depends on howgood your project is. An outstanding presentation gives 40 units of happiness to each of you; an aboveaverage presentation gives 30 units of happiness; a mediocre presentation gives 10 units…
- After ten years as a general auto mechanic in a local garage, Joe decides he is tired of working for others, especially since business is typically slow and he works partially on commission. So, he decides to open his own garage. After estimating the cash flows for his new garage, he finds a large, positive NPV. Which of the following is most likely true about his analysis? Select one: O a. The discount rate he used must be too high. O b. Unless he can find a true source of value in his new venture, he probably made a mistake in estimating his cash flows. He has likely been overly optimistic about the future and has underestimated future cash flows. O c. O d. His estimates of initial outlays must be off. O e. His analysis is probably correct provided there is adequate competition in the auto repair business.Tony can produce 107 a pairs of sandals or 107 units of dress per week. Nick can produce 46 pairs of sandals or X (X < 46) units of dress per week. They decide their time allocation together. Suppose their joint preference dictates that the sandal consumption to dress consumption ratio must be 1:1. Then they will optimally produce Answer field 1 pairs of sandals and Answer field 2 units of dress per week.Suppose that the University of Alabama and Clemson are making spending decisions for theupcoming year. Assume that Alabama is currently spending $15 million on their recruiting andfacilities, and Clemson is spending $10 million. Each team has an additional $5 million to spendor keep as profits. If they both choose to not spend the additional $5 million then Alabama hasa 60% chance of getting the highest quality quarterback recruit to commit to them (getting thecommitment of the player is the goal). However, if they both choose to spend the additional $5million then there is a 57% chance that Alabama gets the high quality quarterback to commit. IfAlabama spends the additional $5 million but Clemson doesn’t then there is a 67% chanceAlabama gets the recruit. However, if Alabama does NOT spend the additional $5million butClemson does then there is a 50% change either team gets the recruit’s commitment. Setup thepayoff matrix and label the players, their strategies, and their payoffs, and…
- The consumer choice is not restricted to the choice of consumptiongoods. In fact, it can apply to all our decisions that involve trade-offs. Suppose Mary has awage per hour of 10 euros. With her earned income she consumes. That isC=wH per day.She also decides how many hours to work of take leisure time each day.H=24-N, whereHis work and N is leisure. Her utility is given by (picture) Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif-ferent curve. What is the labor supply function?Task 4: leisure or work? The consumer choice is not restricted to the choice of consumption goods. In fact, it can apply to all our decisions that involve trade-offs. Suppose Mary has a wage per hour of 10 euros. With her earned income she consumes. That is, C = wH per day. She also decides how many hours to work of take leisure time each day. H = 24 – N, where H is work and N is leisure. Her utility is given by C1-o U(C, N) + B log(N) 1- o (a) Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif- ferent curve. What is the labor supply function? (b) If o > 1, what is the shape of the labor supply? How does it relate with the income andShannon is the mother of a 3-year old. She currently stays home with her child. Before giving birth, Shannon worked as a marketing consultant making $36,000 annually. The cumulative opportunity cost of Shannon's decision to stay at home with her child is $ Shannon is offered a position with a marketing company that pays $36,000 annually. However, Shannon would need to spend an additional $1,500 per month for day care services for her child. The annual opportunity cost of Shannon turning this job down is $
- Zach's preferences are representable by the utility function u = 90.3927, where 9₁ and 92 denote his consumption of goods 1 and 2. (Answers to each of these questions are rounded, where required, to two decimal places.) Still assuming endowments of e₁ = 5 and e₂ = 9 and market prices p₁ = 20 and p2 = 30, what is the maximised value of Zach's utility? O Au= 6.74 O B. u = 5.39 O Cu = 5.65 O D.u = 7.56 O E. None of the aboveYour utility function for income is characterized by U(I) = 10.6, and you are %3D considering a job opportunity that may pay $30,000 per year or $80,000 per year with equal probabilities. Find the maximum you are willing to pay to fully insure yourself? [Please choose the closest answer] O $20,000 $25,000 $20,075 O $1,374 O $22,500 O $21,500 $27,398 O $2,468Discuss the Contingent Valuation Method