Let 100 -100 A = 300 -300 200 -200 be an asset payoff matrix. You are 'greedy': 'more is better' in at least one state. (a) Suppose that a broker offers you to sell asset 2 at a price of AED 300. What should the price of asset 1 be for the Law of One Price to hold, if at all possible? Explain. (b) Can the prices you found under (a) be part of a financial equilibrium? Explain. (c) Give no arbitrage prices q1, q2 consistent with an implicit riskfree discount rate of p= 0.
Q: what should or should not be done to prevent school bullying?
A:
Q: Question 11 of 11 View Policies Current Attempt in Progress Natasha takes out a loan. The interest o...
A: At month t she owes $14000 At month t+1, she owes $14000(1+(0.09/12))=14105 After this payment is pr...
Q: Discuss a theory of economics that you identify with - how is this theory applied in real world scen...
A: Theory of opportunity cost: In economics, opportunity cost can be understood as the second best alte...
Q: An equipment can be bought on installment basis with 24 monthly payments of P3,440, each payable at ...
A: Interest rate = 12 % compounded monthly Monthly rate = 1 % Time = 24 months Payment = monthly
Q: Answer the following and show complete solutions. Instructions: 2. Using the Residential rate sched...
A: Total Cost refers to the total value of all the prices of the input used during a period. It is calc...
Q: 15. Assume the Canadian dollar is equal to $0.88 and the Peruvian "sol" is equal to $0.35. The value...
A: The correct answer is given in the second step.
Q: Khaled has developed a new technology device that is so exciting he is considering quitting his job ...
A: Total variable cost is the aggregate amount of all variable costs associated with the cost of goods ...
Q: their financial obligations. However, the development of crop insurance bas significantly reduced th...
A: Introduction When the development of crop insurance has increased then it significantly reduced the ...
Q: If, in a monopoly market, the demand function for a product is p = 195 − 0.80x and the revenue funct...
A: Monopoly: - monopoly market structure is the structure in which there is only one seller of any good...
Q: Thank you !!!!!! Sherry expects to deposit $2000 now, $1000 4 years from now, and $2500 7 years fro...
A: *Answer:
Q: Identify each of the following acts as representing either saving or investment. a. Lan uses some of...
A: An entity or organization that is being engaged in activities of professional, commercial, or indust...
Q: QUESTION 32 Which of the following is not a decision made within the context of the long run: a. the...
A: If the existing firm is making a profit in the short run, then the new firm will enter the market in...
Q: Labor (workers) Output (frijoles) Total cost (dollars) 0 0 1,000 5 1000 3,000 10 3000 5,0...
A: ATC(average total cost) is found by dividing the TC(total cost) by Q(quantity).
Q: 2. What are some of the predicted effects of repealing DACA on the U.S. federal budget? Repealing DA...
A: DACA was created to safeguard qualifying immigrant teenagers who arrived in the United States as min...
Q: We consider following IS curve: Co+ l, + Go Y = = 1-c(1-t) 1- c(1 – t)* Show how increase in margina...
A: The marginal propensity to consume (MPC) is the proportion of a raise in wage that a consumer spends...
Q: By using the notions of fixed and variable costs explain why theme parks close in winter months
A: Fixed and variable cost Fixed cost refers to cost that remains fixed at all level of output and does...
Q: 10. Mobility of labour A. O Increases efficiency of labour B. O Spoils labour C. O Increases divisio...
A: "Correct option is D."
Q: Explain the two sources for potential GDP growth words and diagrams
A: GDP is a proportion of the worth of the merchandise in goods and administrations created in the econ...
Q: Banks make more money from securitising pools of mortgages rather than holding on to individual mort...
A: Banks follow the policy of securitisation to reduce the debt burden and free up capital and increase...
Q: 4. Assume that Canada and Kenya are trading partners. a. If the real interest rate in Canada decreas...
A: Answer(a) Financial account of Canada will be worsened or in deficits and the financial account of K...
Q: A credit union loaned out $50,000, part at an annual rate of 6% and the rest at an annual rate of 12...
A: Let y represent the loan amount loaned at interest rate 6% or 0.06 such that the remaining 50,000-y ...
Q: If average income goes from $30,000 to $33,000 and consumption increases from $29,000 to $31,000, th...
A: Marginal propensity to consume (MPC) measures the change in spending on consumption for every additi...
Q: In Ethics. The act of killing the priest inside the church during the mass is heavier act of killing...
A: It is already a serious crime to murder a priest. It would be much more serious if it is done within...
Q: Consider the production function F(K,L) = In(K*L). What is the marginal product of capital equal to ...
A: Given Production function: F(K,L)=lnKL ... (1) We have to calculate MP of capital at K=...
Q: If a firm is enjoying modest accounting profit but incurring significant economic losses, which of t...
A: Here, it is given that a firm is enjoying a high accounting profit, but facing an economic loss.
Q: The insurance case for family formation refers to OA) life insurance that a spouse might buy so that...
A: Life insurance is a contract between the insurer and the policyholder. Life insurànce ensures that t...
Q: (Suggested time - 12 mins] MPB Q Q, Q, Q 5 Use the labelled points in this graph to identify the req...
A: Given Diagram
Q: Suppose that an investor wishes to deposit an amount now so that in 30 years $1,000,000 will be in a...
A: Let the amount deposited now be represented by P. Let F represents $1,000,000 which appears to be in...
Q: Explain Gerschenkron’s theory of backwardness in detail
A: A theory is a logical, abstract way of thinking about a phenomenon or its consequences. Observationa...
Q: Identify whether each scenario is an example of a marginal cost, marginal benefit, or neither. Gucci...
A: The expenses that are being incurred for running a business and carrying out its other transactions ...
Q: If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 ...
A: Net exports= Exports - Imports Ford sales of 200 explorers to Germany is US exports and Germany's im...
Q: 2. (20 points) A stocker plans to purchase feedlot. Feed will cost 2X2 and other costs will be 40X. ...
A: The profit is the difference between total revenue and total cost. It means the cost is minimized an...
Q: Which of the following statements is true? A) The Okun’s law describes the positive relationship be...
A: Answer -
Q: In the United States, grain has many uses. These include food (directly and indirectly), fuel, and e...
A: Answer:- Nature negatively affects the dirt in light of the fact that the parts effectively dry it i...
Q: An industry consists of three firms with sales of $310,000, $725,000, and $405,000. a. Calculate the...
A: Total sales = 310000 + 725000 + 405000 = 1440000 1st firm market share = 310000 / 1440000 = 21.53 % ...
Q: On the same graph paper, draw the Demand Curve for the Demand Schedule below, after Reiko's doctor s...
A: New Demand Curve and Demand Schedule for apple juice after Raiko's doctor advice(as per given schedu...
Q: Economists like markets because, generally speaking... Question 2 options: production is organi...
A: A market economy is an economic system in which the decisions regarding allocation, production and d...
Q: 2. Suppose demand and supply are given by Qd, = 7-, and Qs =P- a. Determine the equilibrium price an...
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for yo...
Q: The first costs of an equipment is P 65,000 and a salvage value of P 3,000 at the end of its 6- year...
A: Cost of equipment = 65000 P Salvage value = 3000 Time = 6 years
Q: How is Social Entrepreneurship a contributing factor to SDG
A: In the field of social development, the beginning of the new millennium had brought with it a sea of...
Q: A company in a perfectly competitive market produces an output level Q = 100 where marginal revenue ...
A: In perfectly competitive market firms do not have any power market power because goods are identical...
Q: Describe the modern capitalist system.
A: Modern Capitalist System focuses on the security from government, it includes both the new and old e...
Q: A mechanic quits her current job, which pays $38,000 per year. She can take a job with another firm ...
A: Opportunity cost is defined as the cost incurred when an individual gives up one good for the other ...
Q: Question 18 relies on the following information: Vendors A and B sell a homogenous good and simultan...
A: The Nash equilibrium of this game will be at a point where no player (vendor) will have the incentiv...
Q: If 2000 is deposited in a savings account at the beginning of each of 15 years and the account draws...
A: Given information, Annuity (A): 2000 Interest rate (i): 7% per year Time period (N): 15 years To f...
Q: Is it ever possible that if someone is a net seller of a good, and the price of the good he sells fa...
A: Seller is person who sales goods and services in market in order to make some money . And seller is ...
Q: The Finger Lakes region in New York State produces wine. The climate favors white wines, but reds ha...
A: During the production process, any cost incurred before starting the production and does not change ...
Q: The following graph represents the demand and supply for pinckneys (an imaginary product). The black...
A: Equilibrium in the market occurs at the intersection of demand and supply curves, where quantity dem...
Q: A market consists of groups of buyers and sellers of a good or service. Market equilibrium represent...
A: The curve that depicts the various quantities of goods being demanded by individuals at various leve...
Q: Jeanne was working in Belarusian energy sector, but after a year she became unemployed. While she wa...
A: Hi! Thank you for the question As per the honor code, We’ll answer the first question since the exac...
Step by step
Solved in 3 steps
- 1. Johnathan's utility for money is given by the exponential function: U(X)-4-4*100). a. Based on his utility function, what is his risk-odds for the S+/-1 deal, r($1)? b. Is Johnathan a deltaperson? Explain. c. Is he risk-neutral? Explain. d. What is his risk-odds for the $+/-100 deal, r($100)? e. What is his risk-aversion coefficient? [(-x/10A buyer wants to buy one unit of a good from an incumbent seller. The buyer's valuation of the good is 1, while the seller's cost of producing it is 1/2. Before the parties trade, a rival seller enters the market and his cost, c, is distributed on the unit interval according to a distribution function with density g (c). The two sellers then simultaneously make price offers and the buyer trades with the seller who offers the lowest price. If the two sellers offer the same price the buyer buys from the seller whose cost is lower. 1. Determine the price that the buyer pays in equilibrium, p, as a function of c. Given p, write the payoffs of the expected payoffs of the buyer and the two sellers. 2. Suppose that the distribution of c is uniform. Show p and the expected payoffs of the parties graphically (put c on the horizon- tal axis and the equilibrium price function on the vertical axis and show the payoffs by pointing out the appropriate areas in the graph). 3. Now suppose that the…A4 The Suboptimality of Lower-Than-Cost Reserve Prices: A seller chooses to sell an object by means of a Vickrey auction. If trade occurs, the seller incurs a positive opportunity cost (i.e. c > 0). There are n > 1 bidders participating in the auction. Suppose that the all of the bidders play according to a symmetric and increasing BNE strategy. Show that the seller is always better off by setting the reserve price equal to her cost (i.e. r = c) than by setting the reserve price below her cost (i.e. r < c).
- A seller has an indivisible asset to sell. Her reservation value for the asset is s; which she knows privately. A potential buyer thinks that the asset's value to him is b; which he privately knows. Assume that s and b are independently and uniformly drawn from [0; 1]: If the sellersells the asset to the buyer for a price of p; the seller's payoff is p-s and the buyers' payoff is b- p: 1. Suppose the buyer makes a take-it-or-leave-it offer p to the seller. What is the optimal offer if the buyers' value is b = 1/24) Increasing the fit of investment service to the long term objectives of each investor—moving from caveat emptor “product” sales to more durable, shared-understanding service relationships— would increase the duration or “loyalty” and thereby the economic value of client–manager relationships. (The Winners’ Game, by Charles D. Ellis, 2011) Select an alternative True FalseLet p denote a lottery over a finite set of possible prizes denoted by the vector Y; and let 8x denote another lottery that gives prize X for certain. (i) Using the utility function u(x) = 1 – e-ax, show that for CARA utility functions, adding a constant amount to each lottery prize does not change risk attitudes i.e. if 8x 2 p, then ôx+z > p' where p' denotes the lottery which simply adds an amount Z to each prize in p. х1-р —1 (ii) Using the utility function u(x) ,p 2 0, p + 1, show that CRRA 1-р utility functions have the property that proportional changes in prizes do not affect risk attitudes i.e. if 8x 2 p, then dax z p' where p' denotes the lottery which multiplies each prize in p by a > 0.
- For the next set of multiple choice questions, consider a construction contract between a builder and a client, where V = $20,000 R = $1,000 P = $15,000 V = the client's value of performance; R = the client's reliance investment; and P=the contract price, payable on performance. Suppose that at the time the contact was made, the cost of performance to the builder is uncertain, but it was known that it will definitely take one of the following values: C=($10,000; $14,000; $18,000; $22,000). 23. It is efficient for the builder to breach this contract if it turns out that (a) C=$10,000 (b) C=$14,000 (c) C=$18,000 (d) C=$22,000. 24. Calculate the amount of expectation damages for this example. It is equal to: (a) $1,000 (b) $5,000 (c) $15,000 (d) $20,000 25. Under expectation damages, the builder will breach the contract rather than perform if C equals (a) $10,000 (b) $14,000 (c) $18,000 (d) $22,000You are evaluating the possibility that your company bids $150,000 for a particular construction job. (a) If a bid of $150,000 corresponds to a relative bid of 1.20, what is the dollar profit that your company would make from winning the job with this bid? Show your work. (b) Calculate an estimate of the expected profit of the bid of $150,000 for this job. Assume that, historically, 55 percent of the bids of an average bidder for this type of job would exceed the bid ratio of 1.20. Assume also that you are bidding against three other construction companies. Show your work.How to replicate the payoff of a bond (riskless portfolio) using shares and call options? Based on this conclusion, how does a single-step binomial tree option pricing model work?
- Consider the game below, which is infinitely repeated at t = 1,2, . Both players discount the future at rate d E (0, 1). The stage game is C D C 5,5 0,6 D 6,0 1,1 1. The following three questions are about "Grim Trigger" strategies. (a) Describe the "Grim Trigger" strategy profile of this game. (b) Draw the finite automata representation of this strategy profile. (c) Find the lowest value of d for this strategy profile to form a subgame perfect equilibrium. 2. Suppose that the players play (C,C) in period t = 1,3, 5, ... and plays (D,D) in period t = 2,4, 6, ... Compute the discounted payoff of each player. 3. Find a subgame perfect equilibrium such that, on the equilibrium path, (D,D) is played at periods t = 1,3, 5 .., and (C,C) is played at periods t = 2, 4, 6, ... Write down the finite automata representation for the strategy profile you proposed. Find the lowest value of ő for the profile to form a subgame perfect equilibrium.Assume you are one of the two bidders in a second-price sealed bid auction for a preserved grilled cheese sandwich which purportedly bore the portrait of the Virgin Mary: • This sandwich is worth $8000 to you. • You know that your rival bidder’s valuation is uniformly distributed between $0 and $12,000. a) What is the probability that your bid exceeds your rival’s bid given that you know your rival’s valuation is uniformly distributed between $0 and $12,000? (In other words, what is the probability that your rival’s bid is lower than your valuation?) Remember the equilibrium bidding strategies for a SPA in weakly dominant strategies ! b) What is your rival’s average bid, if you win the auction (considering that he must have bid below your bid)? c) What is your expected payoff from this auction, if you win the bidding ? (Hint: Combine b) and c), i.e. compute the payoff from winning giving the probability of winning)1) Expected Utility formulation was initially proposed as a solution to the St. Petersburg paradox (or, its predecessor). However, does it really solve all such paradoxes? More specific, consider an individual whose "little Bernoulli" utility functions is, a la Cremer, given by u(x) = x^. Construct a lottery similar to St. Petersburg lottery in that your lottlery, too, gives a finite prize with probability one, but not only the expected value, but also the expected utility of your lottery (calculated using the u(.) above) is not finite. Discuss how that violates EU as a solution for the St. Petersburg paradox.