A macroeconomist would study O the price changes at K-Mart. O the cost problems at several airlines. O the economy's unemployment level. O none of these.
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- A principal is considering hiring a lawyer to represent him or her in a lawsuit. The principal gets $ 250 000 if the suit is won and $0 otherwise. If the agent works hard (100 hours), there is a 50% chance that the principal will win the suit. If the agent does not work hard (10 hours), there is a 15% chance that the principal will win the suit. Without a lawyer, the principal is sure to lose the suit. The principal can monitor the agent, and both parties are risk neutral. The agent's utility function is m-50e, where m is money in dollars and e is effort in hours. The agent's fee for this case is $100 per hour, and the outside opportunity is worth $500. Write down the game in extensive form and solve it.Wayne Enterprises had several salespersons that worked for a contract salary. To encourage them to make more sales, Wayne offered a $5,000 bonus to the salesperson who had the highest total dollar value the following month. That next month, Wendy had the highest sales. When Wendy received her next paycheck, there was no bonus. If Wendy sues Wayne to recover the $5,000 bonus, the likely result will be A. Wendy will lose because she already had a contract so there was no consideration B. Wendy will win because the offer of a bonus for high sales constituted consideration because it entailed additional performance by both parties C. Wendy will lose unless the promise was in writing. D. Wendy will win because of moral considerationA ship captain who buys commodities on islands where they are cheap and selling them on islands where they cost more. For this, he uses a fleet of ships that can cargo (tradeable commodities) and shield themselves and the rest of your fleet from thieves. Ships are reviewed by their tons of cargo that they can carry and their "Combat Rating," this is the number of tons they can protect from being marauded by pirates, and the number of operating crew. There are 2 ships that can be purchase: Name Corvette Freighter Cargo Combat 0 10T 100T 0. ShipCost Crew $1M $10M 1 10 So, it would take 10 Corvettes to fully protect the cargo of one freighter. If any cargo is left unprotected, there is a 50% chance that it will be raided by pirates and taken. This means that if you purchased 9 Corvettes and 1 Freighter, 10T of cargo would be unprotected and there would be a 50% chance that pirates would steal the 10T of unprotected cargo. Suppose that each day, you can buy tons of food for $500 ($182,500…
- Say there are two individuals; Hala and Anna who are deciding on either to buy health insurance on a pooling arrangement basis or otherwise. Both face a 30% probability of losing RM40 on medical services and 70% of losing nothing. With these information discuss whether Hala and Anna should join this arrangement or pay the medical services costs out of their own pocket money.COVID-19 has caused several shortages: paper products, hand sanitizer, and even nurses. When a hospital needs nurses, they might call Fastaff, which has been sending its nurses all around the country. Once a nurse gets an assignment, they pack their bags and need to be there within a week. During a pandemic, these assignments come with some risk, but these nurses are well compensated for their time. “They really run into the fire,” explained Fastaff Senior VP of Marketing Lauren Pasquale-Bartlett. “They’re very brave, they’re like the special forces of nursing. They go in for these really critical assignments.” The need for traveling nurses across the country has increased drastically because of the coronavirus pandemic. One of the state’s needing nurses is Ohio, according to Pasquale-Bartlett. “Particularly in the last few weeks we’ve seen a two to three increase in demand in requests for nurses to come in and support the staff,” she said. “That really indicates to us that it’s an…Two players are involved in a game. In the game each player begins with $10. Each player must simultaneously make a choice of how much of the $10 to allocate between two accounts: a 'private' account, and a 'public' account. Money allocated to the private account by a player is kept by that player. Money allocated to the public account is multiplied by 1.5, and then distributed back equally to each of the two players. Each player has two possible choices: (i) Allocate $0 to the public account; (ii) Allocate $10 to the public account. A player's payoff from each outcome is equal to the sum of their private account money and one-half of the total public account money. For example, if both players allocated $10 to the public account, they each have a payoff equal to $0 + (1/2) ($20) (1.5) = $15.00. Draw a game table to represent this game. Do players have a strict dominant strategy in this game? What is the Nash equilibrium of the game? Does the Nash equilibrium outcome maximise the total…
- Bill owes Bob $36. Just before Bill pays him the money, he gives Bob the opportunity to play a dice game to potentially win more money. The rules of this game are as follows: If Bob rolls doubles (probability 1/6), Bill will Bob double ($72). If he misses doubles on pay the first try, he can try again or settle for half the money ($18). If he makes doubles on the second try Bill will again pay-up double ($72), but if Bob misses doubles on the second try Bill will only pay him one-third ($12). Should Bob decide to play the dice game with Bill, or insist that he pay the $36 now? Use a decision tree to support your answer.Question 1 ( A mountain village owns a common pasture where villagers can each graze a goat. The cost to a goat owner of owning and caring for a goat is £3. The total revenue from all goats on the common pasture is fg) (51g-3g2), where g is the number of goats on the pasture. All goats are identical, so revenue is divided equally per goat- owner. The town council notices that total profit from the pasture is not maximised if villagers are allowed to pasture goats for free. The council decides to allow a goat to use the common pasture only if its owner buys it a goat license. To maximise total profit (of villagers and council), how many £ per goat should the council charge? OO 000 26 20 228 22 24 ADeborah is at the casino and is considering playing Roulette. In Roulette, a ball drops into one of 36 slots on a spinning wheel. 17 of the slots are red, 17 are black, and 2 are green. Each slot is equally likely and occurs with probability 1/36. Deborah bets $1.00 on black. If the ball drops into a black slot she receives $2.00 and if it drops into a red or green slot, she receives nothing. a) The expected value of Deborah’s bet (after subtracting the $1.00 she bet) is $________________ b) Given that Deborah makes this bet, is she risk adverse, risk neutral, or risk loving?
- Suppose that you graduate from college next year and you have two career options: 1) You will start a job in an investment bank paying a $100,000 annual salary. 2) You will start a Ph.D. in economics and, as a student, you will receive a $20,000 salary. You are bad with decisions, so you are letting a friend of yours decide for you by flipping a coin. The probabilities of options 1 and 2 are, therefore, each 50%. a) Illustrate, using indifference curves, your preferences regarding consumption choices in the two different states of the world. Assume that you are risk-averse. [Include also the 45 degrees line in your figure] b) Now show how the indifference curves would change if you were substantially more risk averse than before. Explain. c) Now show the indifference curves if you are risk neutral and if you are risk loving. d) Show your expected utility preferences from point a) mathematically.Let's say we have a game called "guess 2/3 of the average," where players can choose any number x ∈ [0, 100]. 5% of players are at level N0, 40% at level N1, 35% at level N2, 15% at level N3, and 5% at level N4. Players at level N0 choose a number randomly, while players at higher levels choose a number according to their beliefs, which are as follows: players at higher levels believe that all other players are one level lower than themselves. (a) What will be the winning number and which level players will be the winners? (b) Under the assumptions of classical game theory, the mentioned version of the game "guess 2/3 of the average" has exactly one equilibrium, in which everyone chooses the number 0. Prove that this outcome is indeed a Nash equilibrium of the game.Q19