MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
10th Edition
ISBN: 9781319467203
Author: Mankiw
Publisher: MAC HIGHER
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Question
Chapter 18, Problem 1PA
(a)
To determine
Identify the nature of the problem in the given situation.
(b)
To determine
Identify the nature of the problem in the given situation.
(c)
To determine
Identify the nature of the problem in the given situation.
(d)
To determine
Identify the nature of the problem in the given situation.
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Students have asked these similar questions
Robert decides to start working for the local ridesharing company. He has a large 12-passenger van and thinks he will be in big demand at the airport. He tells his personal car insurance company that he is driving for a ridesharing company, and he needs some additional insurance. He is denied additional coverage. Why?
There is no such thing as ridesharing insurance.
He lives in a state that doesn’t offer ridesharing insurance.
The city he lives in is too small for him to qualify for ridesharing insurance.
Many insurance companies will not insure high-occupancy vehicles under their ridesharing policies.
John owns and runs a food truck, which he expects to increase his wealth to $40,000 this year. John knows that every year, there
is a 20% chance that his truck will be firebombed by one of his ruthless food truck competitors. If this happens, he will face a bill
of $10,000 in repairs and lost income. John can choose to get insurance to cover all repair costs and lost wealth. Use this
information and the information in the table and graph to answer the questions.
Total utility
Wealth
Total utility (utils)
730
1000
$32,000
900
$34,000
755
800
700
$36,000
785
600
792
500
$38,000
400
300
200
100
0
$5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000
Wealth
What is John's expected wealth?
expected wealth: $
What is the price for John's insurance?
price of insurance: $
What is John's expected utility without insurance?
expected utility: 730
If John chooses to pay the insurance policy price, what would
be his total utility?
total utility:
1030
42000
10000
utils
utils
Pick a good and explain how asymmetric or imperfect information could impact the price and confidence of a buyer or seller.
Chapter 18 Solutions
MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
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