For each of the following goods, explain why a free-rider problem arises or how it is avoided. Sharing downloaded music A. is a private good B. does not have a free-rider problem C. has a free-rider problem that can be eliminated by charging people to download music O D. has a free-rider problem that cannot be eliminated because once music is downloaded, it is nonexcludable A Canada Day fireworks display A. does not have a free-rider problem B. has a free-rider problem that cannot be eliminated C. has a free-rider problem that can be eliminated by using taxes paid by area residents to finance the display D. is a private good 00

For each of the following goods, explain why a free-rider problem arises or how it is avoided. Sharing downloaded music A. is a private good B. does not have a free-rider problem C. has a free-rider problem that can be eliminated by charging people to download music O D. has a free-rider problem that cannot be eliminated because once music is downloaded, it is nonexcludable A Canada Day fireworks display A. does not have a free-rider problem B. has a free-rider problem that cannot be eliminated C. has a free-rider problem that can be eliminated by using taxes paid by area residents to finance the display D. is a private good 00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Adam is considering what skills to study in online school. Her utility function is based on the income she earns, and is defined by U(I) = I0.8. If she learns the skill of SPSS, she will earn $145,000 per year with probability 1. If she learns the skill of Tableau, she will earn $300,000 per year with probability 0.6 (assuming that she gets the certificate) and $30,000 with probability 0.4 (if she learns without earning a certificate and she has to find a waiter job). a. Is she risk averse, risk neutral, or risk loving? Explain.b. Write out the equation for her expected utility for each skill. c.Which skill will she learn? Show your work. d.Suppose someone offers her insurance for the possibility that she does not get a Tableau certificate. This insurance will provide her an amount of income in addition to the waiter job wages that makes her indifferent between learning SPSS and Tableau. What is this amount, and what is the cost of the insurance? (note: many possible answers)
Q2
Jack and Diane work at a bakery. Jack can make either five batches of cookies or two cakes per hour, while Diane can make either four batches of cookies or three cakes per hour. At 9:00 a.m. they receive an order for 24 batches of cookies and nine cakes. What time is the soonest they can have the order ready?
Matthew is playing snooker (more difficult variant of pool) with his friend. He is not sure which strategy to choose for his next shot. He can try and pot a relatively difficult red ball (strategy R1), which he will pot with probability 0.4. If he pots it, he will have to play the black ball, which he will pot with probability 0.3. His second option (strategy R2) is to try and pot a relatively easy red, which he will pot with probability 0.7. If he pots it, he will have to play the blue ball, which he will pot with probability 0.6. His third option, (strategy R3) is to play safe, meaning not trying to pot any ball and give a difficult shot for his opponent to then make a foul, which will give Matthew 4 points with probability 0.5. If potted, the red balls are worth 1 point each, while the blue ball is worth 5 points, and the black ball 7 points. If he does not pot any ball, he gets 0 point. By using the EMV rule, which strategy should Matthew choose? And what is his expected…
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