An individual’s value for a good or service is a. the amount of money he or she used to pay for a good. b. the amount of money he or she is willing to pay for it. c. the amount of money he or she has to spend on goods. d. None of the above.

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Answer 1

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Chapter 2, Problem 1MC

An individual’s value for a good or service is

a. the amount of money he or she used to pay for a good.
b. the amount of money he or she is willing to pay for it.
c. the amount of money he or she has to spend on goods.
d. None of the above.

Expert Solution & Answer

To determine

The value of a good or service.

Explanation of Solution

The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.

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Question Seven There are specific applications of the hidden-action or moral hazard model. Consider employment contracts signed between a firm's owners and a manager who runs the firm on behalf of the owners. The manager is offered an employment contract which they can accept and decide how much effort, e ≥ 0, to exert. Suppose that an increase in effort, e, increases the firm's gross profit, not including payments to the manager, but is personally costly to the manager and the firm's gross profit, Пg, takes the following form: Пg = e +ε, ε~N(0,2). Let s denote the salary, which may depend on effort and/or gross profit, depending on what the owner can observe, offered as part of the contract between the owner and manager. Suppose that the manager is risk averse and has a utility function with respect to salary of the form: Aσ² U(W)=μ- 2 a) Derive the optimal result of the owner's expected net profit where there is full information and state what it implies. b) Suppose now that the…

1. The IS/MP model assumes that the Fed sets the real interest rate at a given level Rt. Suppose the Fed adopts a monetary policy rule that instructs it how to change the real interest rate in response to short-run output. Let's call this a monetary policy rule (MPR): The parameter x is positive. Rt=+xY a) Redraw the IS/MP diagram replacing the MP curve with the MPR curve. Show how an aggregate demand shock affects output and interest rates in the short run. Use the IS and MPR equations to solve for the changes in output and the real interest rate. b) How does the change in a affect investment in the IS/MPR model? Explain how a tax cut affects short-run output and investment in this version of the short-run model. The effect on investment is called crowding out. c) Add the Phillips curve to complete the short-run model. Illustrate how the Fed's choice of large it makes reveals its trade off between inflation and output in the short run.

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Answer 2

Textbook Question

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Chapter 2, Problem 1MC

An individual’s value for a good or service is

a. the amount of money he or she used to pay for a good.
b. the amount of money he or she is willing to pay for it.
c. the amount of money he or she has to spend on goods.
d. None of the above.

Expert Solution & Answer

To determine

The value of a good or service.

Explanation of Solution

The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.

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Answer 3

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Chapter 2, Problem 1MC

An individual’s value for a good or service is

a. the amount of money he or she used to pay for a good.
b. the amount of money he or she is willing to pay for it.
c. the amount of money he or she has to spend on goods.
d. None of the above.

Expert Solution & Answer

To determine

The value of a good or service.

Explanation of Solution

The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.

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Answer 4

Textbook Question

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Chapter 2, Problem 1MC

An individual’s value for a good or service is

a. the amount of money he or she used to pay for a good.
b. the amount of money he or she is willing to pay for it.
c. the amount of money he or she has to spend on goods.
d. None of the above.

Expert Solution & Answer

To determine

The value of a good or service.

Explanation of Solution

The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.

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Answer 5

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Answer 6

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Answer 7

Expert Solution & Answer

To determine

The value of a good or service.

Explanation of Solution

The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.

Answer 8

Expert Solution & Answer

To determine

The value of a good or service.

Explanation of Solution

The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

The value of a good or service.

Answer 12

Explanation of Solution

The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.

Answer 13

Ch. 2 - An individual’s value for a good or service is the...Ch. 2 - Prob. 2MC Ch. 2 - Prob. 3MC Ch. 2 - Prob. 4MC Ch. 2 - Prob. 5MC Ch. 2 - Prob. 6MC Ch. 2 - Prob. 7MC Ch. 2 - Prob. 8MC Ch. 2 - Prob. 9MC Ch. 2 - Prob. 10MC

An individual’s value for a good or service is a. the amount of money he or she used to pay for a good. b. the amount of money he or she is willing to pay for it. c. the amount of money he or she has to spend on goods. d. None of the above.

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