Consider the setup from Question 1 and 2. Sam has another idea: They buy two tickets (that have independent outcomes) and share the costs and proceeds equally. Is this better than buying no tickets? O a. Yes, Sam's solution is preferable to buying no ticket. O b. Yes, Sam's solution is inferior to buying no ticket. O c. Both Janet and Sam would be indifferent between pooling their risk and buying no ticket. O d. There is not enough information to answer this question.

Consider the setup from Question 1 and 2. Sam has another idea: They buy two tickets (that have independent outcomes) and share the costs and proceeds equally. Is this better than buying no tickets? O a. Yes, Sam's solution is preferable to buying no ticket. O b. Yes, Sam's solution is inferior to buying no ticket. O c. Both Janet and Sam would be indifferent between pooling their risk and buying no ticket. O d. There is not enough information to answer this question.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

None
image attached
Handwritten solution not required correct answer will get instant upvote.
3. Consider a parent who is altruistic towards her child, but also cares about her own consumption. The parent's utility over her own consumption and that of her child is up = log(co) +a log(ci) where c is the child's consumption, and a > 0 is the degree of parental altruism. Suppose that the parent can invest in the child's human capital by spending money (e) on her education; education generates human capital h /() and human capital is paid at rate w. The parent has a total income of (a) Write down an expression for the child's future consumption in terms of the parent's choice of e. (b) Now write down the Lagrangian for the parent's decision problem.
only typed solution
2. (All right, this one IS tricky. Use the hints and do the best you can!) Suppose there are 2 brothers - Cain and Abel. Cain has a utility function U(L,R) 2min {L,R}, where L and R are left and right shoes respectively. Abel's utility function for shoes is U(L,R)-3L+3R. Further, suppose Cain's endowment is (4 left, 8 right) while Abel's endowment is (7 left, 2 right). a. b. C. d. e. Carefully construct the Edgeworth Box for this exchange economy being careful to label everything and to indicate the box's dimensions. Label the endowment point as well as the initial indifference curves for both Cain and Abel. Label the Contract Curve. (Hint: they cannot trade ½ a shoe.) What are the possible equilibria in this economy? Describe how those equilibria would occur.
Question 3 A certain household comprises of a couple, Adam (A) and Betty (B). They have lexicographic preferences over two goods G1 and G2 - A wants to consume as much of G1 as possible, before moving on to G2 whereas, for B, it is the opposite, she wants to consume as much of G2 as possible before moving on to G1.¹ Given their varying preferences, they decide to shop separately, after dividing the household income equally. The household income is $8. One difference to the usual setting - there are government restrictions in place so that no individual is allowed to buy more than two units of either good. Hint: Do not use mathematical brute force (like Calculus) to solve this problem. A simple diagram with appropriate budget lines, etc. should suffice. 1) Suppose prices are p= (P₁, P2) = (1,2). Denote the optimal choice of A and B as a= b= (b₁,b₂) respectively. Solve for a and b. (a1, a2) and
Suppose your total benefits of renting x DVD's next month is: -²2² +14x+50 The cost of renting a DVD is $2, and so the total cost of renting x DVD's is $2x. Calculate your net benefit from watching 1, 2...8 DVDs. Complete column (2). (Enter your responses as integers.) (1) DVDs Rented 0 1 N345678 2 (2) Total Net Benefit