ECON MACRO
ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 17, Problem 2.5P
To determine

The minimum level of quota to have an impact on the trade and determine the conditions when the net welfare loss from an import quota exceeds the net welfare loss from equivalent tariff.

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An actuary analyzes a company’s annual personal auto claims, M and annual commercialauto claims, N . The analysis reveals that V ar(M ) = 1600, V ar(N ) = 900, and thecorrelation between M and N is ρ = 0.64. Compute V ar(M + N ).
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