QUESTION 26A deck of 52 playing cards consists of 4suites: clubs, spades, hearts, and diamonds.Each suite consists of 13 cards. Draw onefrom a deck of cards. Let A=a card "2" isdrawn, B=a "diamond" card is drawn. Whichis the value of P(A and B), i.e., {probabilitythat the card drawn is "diamond" and "2"} ?1/524/5213/5216/52

Given: A = a card "2" is drawn Total number of 2=4 Total 4 suites are there in 52 card decks. To…

Answered: A deck of 52 playing cards consists of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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19
A buyer wants to purchase a house from a seller. Let v be the quality of this house. The quality v is known to the seller but unobservable to the buyer. The buyer thinks the chance that v=$1k is 20%, v=$10k is 40%, and v=$50k is 40%. The seller’s valuation of the house is v and the buyer’s valuation of the house is 2v a) Suppose both the buyer and the seller see the value of v . Also suppose the transaction price equals the value of v (i.e. if =10k, then the buyer pays 10k for the house). Calculate the buyer’s expected profit before seeing the value of b) Suppose only the seller sees v. Also suppose the buyer is allowed to make any offer to the seller and the seller accepts it if the offered price is above or equals to v. What is the buyer’s profit maximizing offer? What is the buyer’s maximum profit? c) Base on your answers from (a) and (b), what is the value of information (i.e. the benefits of seeing the value of ) to the buyer?
4. Consider the situation in which player 1 knows what game is played (the first or the second). But player 2 only knows that the first game is played with probability 1/3 and the second game is played with probability 2/3. Player 1 Player 1 Player 2 S B S 1,1 0,0 B 0,0 0,0 Player 2 S B S 0,0 0,0 B 0,0 2,2 (a) Describe the game as a Bayesian game. (b) Find the Bayesian Nash equilibria.
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2 Prove rigourously, "Constant relative risk aversion (CRRA) implies decreasing absolute risk aversion (DARA), but the converse is not necessarily true."
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You have a house worth 300,000. A fire will burn everything to the ground and leave $0 in value. Assume full coverage in the case of a fıre. In every given year, there is a 5% probability that your home burns. If your Utility function is U=Wealth1/2 what is your expected utility without insurance? O 512 O 520.33 O 212 O $250,000
3. Consider the game below. С1 C2 C3 R1 1, 1 4, 6 8, 5 1, 2 5, 4 R2 R3 2, 6 2, 7 7, 6 0, 7 3.1. Does the game have any pure strategy NEs? 3.2. Check whether a mixed strategy NE exists in which A is mixing R1 and R2 with positive probabilities, playing R3 with zero probability, while B is mixing C1 and C3 with positive probabilities while playing C2 with zero probability. [Let (p1,P2, P3) be the probabilities with which A plays (R1, R2,R3) and let (q1,92, 93) be the probabilities with which B plays (C1, C2,C3). Make use of the following NE test: m* is a NE if for every player i, u;(mị , m²¿) = u;(Si, m²¡) for every si E S¡|m¡(sji) > 0 and u¡(m¡ ,m²¡) > u¡(s¡,m;) for every si E S¡ |m¡ (s¡) = 0. Hint: Each player must be indifferent between those of her pure strategies that are used (with positive probability) in her mixed strategy, and unused strategies must not yield a payoff that is higher than the payoff a player gets with her NE (mixed) strategy.] %3D
Your friend is contemplating buying a local restaurant. He has assessed the lifetime profits, including resale, to be $11 million with 20% chance, $6 million with 60% chance or $3 million with 20% chance. Knowing the most your friend would pay for the restaurant is $6.4 million, what can you infer about the situation? O A. The expected payoff of the restaurant is $6.333 million, the risk-discount being offered by your friend is $77.000 and your friend is risk averse with respect to this purchase. O B. The expected payoff of the restaurant is $6.4 million, the risk-premium being required by your friend $0 and your friend is risk neutral with respect to this purchase. o C. The expected payoff of the restaurant is $6.4 million, the risk-premium being required by your friend $200,000 and your friend is risk seeking with respect to this purchase. O D. The expected payoff of the restaurant is $6.333 million, the risk-premium being required by your friend is $333,000 and your friend is risk…
If probability of the student attend the first lecture is 0.55, the probability that he attend the second lecture is 0.40, and the probability he attend both is 0.28. Find probability that he not attend first lecture or not attend the second one: O.72 O.36 O.95 O.27

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