The market can provide efficient outcomes.

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Answer 1

Question

Chapter 3, Problem 1DQ

Summary Introduction

To determine: The market can provide efficient outcomes.

Expert Solution & Answer

Explanation of Solution

a.

Hurricane insurance and beach houses:

In this insurance market, customers would not expect disproportionate information as it would provide more problems. The probability of a hurricane is unpredictable. In such cases, moral hazard could be an factor of issue; more people will prefer to construct houses near to the beach if they have a proper hurricane insurance. However, people will expect the providers of hurricane insurance to function fairly efficient.

b.

Medical Care:

In medical care, there is considerable uneven information in the markets for insurance consumers and malpractice insurance for doctors. For better consumption, the pricing must be similar to the marginal expenses, and the insurance effect might decrease the perceived pricing for consumption of medicinal care. This could lead to consumption greater than the effective level. Considering the roles of consumption, regulation, taxes, and costs transfers from the uninsured to the insured, there are some purpose to expect the market to be effective.

c.

Stock market:

In this market, there is adequate information and greater number of purchasers and sellers. In this market, we can expect efficient outcomes.

d.

MP3 Players:

From a country point of view, there is a good arrangement of information and competition in regards to music and MP3 players. The outcome of this will likely be effective for MP3 players. However, some companies might try to capitalize on the market power through great brand awareness and proprietary downloading equipment.

e.

Loans for students to attend college:

In this market, private players allocation are probably incompetent without government interference. Student loan markets might get affected from asymmetric information; the student will be able to know about the lenders whether he will repay the loan or not, it can be a method of opposition selection. Government interference do not resolve the opposing selection issue in the give case as participants in the student loan program is not obligatory, however, it might create a market that would not take place without any intervention.

f.

Housing:

This market is likely to be comparatively effective. Some inadequacies may take place, such as asymmetric information, the seller is more informative about the house than the purchaser and differentiated goods. However, the market has improved to alleviate these inadequacies. For instance, purchasers can employ the home inspector to assist him to focus more on the quality. Also, steps to increase more number of homes on the market to increase the competition.

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Students have asked these similar questions

$5,000 received each year for five years on the first day of each year if your investments pay 6 percent compounded annually. $5,000 received each quarter for five years on the first day of each quarter if your investments pay 6 percent compounded quarterly. Can you show me either by hand or using a financial calculator please.

Can you solve these questions on a financial calculator: $5,000 received each year for five years on the last day of each year if your investments pay 6 percent compounded annually. $5,000 received each quarter for five years on the last day of each quarter if your investments pay 6 percent compounded quarterly.

Now suppose Elijah offers a discount on subsequent rooms for each house, such that he charges $40 for his frist room, $35 for his second, and $25 for each room thereafter. Assume 30% of his clients have only one room cleaned, 25% have two rooms cleaned, 30% have three rooms cleaned, and the remaining 15% have four rooms cleaned. How many houses will he have to clean before breaking even? If taxes are 25% of profits, how many rooms will he have to clean before making $15,000 profit? Answer the question by making a CVP worksheet similar to the depreciation sheets. Make sure it works well, uses cell references and functions/formulas when appropriate, and looks nice.

Answer 2

Question

Chapter 3, Problem 1DQ

Summary Introduction

To determine: The market can provide efficient outcomes.

Expert Solution & Answer

Explanation of Solution

a.

Hurricane insurance and beach houses:

In this insurance market, customers would not expect disproportionate information as it would provide more problems. The probability of a hurricane is unpredictable. In such cases, moral hazard could be an factor of issue; more people will prefer to construct houses near to the beach if they have a proper hurricane insurance. However, people will expect the providers of hurricane insurance to function fairly efficient.

b.

Medical Care:

In medical care, there is considerable uneven information in the markets for insurance consumers and malpractice insurance for doctors. For better consumption, the pricing must be similar to the marginal expenses, and the insurance effect might decrease the perceived pricing for consumption of medicinal care. This could lead to consumption greater than the effective level. Considering the roles of consumption, regulation, taxes, and costs transfers from the uninsured to the insured, there are some purpose to expect the market to be effective.

c.

Stock market:

In this market, there is adequate information and greater number of purchasers and sellers. In this market, we can expect efficient outcomes.

d.

MP3 Players:

From a country point of view, there is a good arrangement of information and competition in regards to music and MP3 players. The outcome of this will likely be effective for MP3 players. However, some companies might try to capitalize on the market power through great brand awareness and proprietary downloading equipment.

e.

Loans for students to attend college:

In this market, private players allocation are probably incompetent without government interference. Student loan markets might get affected from asymmetric information; the student will be able to know about the lenders whether he will repay the loan or not, it can be a method of opposition selection. Government interference do not resolve the opposing selection issue in the give case as participants in the student loan program is not obligatory, however, it might create a market that would not take place without any intervention.

f.

Housing:

This market is likely to be comparatively effective. Some inadequacies may take place, such as asymmetric information, the seller is more informative about the house than the purchaser and differentiated goods. However, the market has improved to alleviate these inadequacies. For instance, purchasers can employ the home inspector to assist him to focus more on the quality. Also, steps to increase more number of homes on the market to increase the competition.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 3, Problem 1DQ

Summary Introduction

To determine: The market can provide efficient outcomes.

Expert Solution & Answer

Explanation of Solution

a.

Hurricane insurance and beach houses:

In this insurance market, customers would not expect disproportionate information as it would provide more problems. The probability of a hurricane is unpredictable. In such cases, moral hazard could be an factor of issue; more people will prefer to construct houses near to the beach if they have a proper hurricane insurance. However, people will expect the providers of hurricane insurance to function fairly efficient.

b.

Medical Care:

In medical care, there is considerable uneven information in the markets for insurance consumers and malpractice insurance for doctors. For better consumption, the pricing must be similar to the marginal expenses, and the insurance effect might decrease the perceived pricing for consumption of medicinal care. This could lead to consumption greater than the effective level. Considering the roles of consumption, regulation, taxes, and costs transfers from the uninsured to the insured, there are some purpose to expect the market to be effective.

c.

Stock market:

In this market, there is adequate information and greater number of purchasers and sellers. In this market, we can expect efficient outcomes.

d.

MP3 Players:

From a country point of view, there is a good arrangement of information and competition in regards to music and MP3 players. The outcome of this will likely be effective for MP3 players. However, some companies might try to capitalize on the market power through great brand awareness and proprietary downloading equipment.

e.

Loans for students to attend college:

In this market, private players allocation are probably incompetent without government interference. Student loan markets might get affected from asymmetric information; the student will be able to know about the lenders whether he will repay the loan or not, it can be a method of opposition selection. Government interference do not resolve the opposing selection issue in the give case as participants in the student loan program is not obligatory, however, it might create a market that would not take place without any intervention.

f.

Housing:

This market is likely to be comparatively effective. Some inadequacies may take place, such as asymmetric information, the seller is more informative about the house than the purchaser and differentiated goods. However, the market has improved to alleviate these inadequacies. For instance, purchasers can employ the home inspector to assist him to focus more on the quality. Also, steps to increase more number of homes on the market to increase the competition.

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Answer 4

Question

Chapter 3, Problem 1DQ

Summary Introduction

To determine: The market can provide efficient outcomes.

Expert Solution & Answer

Explanation of Solution

a.

Hurricane insurance and beach houses:

In this insurance market, customers would not expect disproportionate information as it would provide more problems. The probability of a hurricane is unpredictable. In such cases, moral hazard could be an factor of issue; more people will prefer to construct houses near to the beach if they have a proper hurricane insurance. However, people will expect the providers of hurricane insurance to function fairly efficient.

b.

Medical Care:

In medical care, there is considerable uneven information in the markets for insurance consumers and malpractice insurance for doctors. For better consumption, the pricing must be similar to the marginal expenses, and the insurance effect might decrease the perceived pricing for consumption of medicinal care. This could lead to consumption greater than the effective level. Considering the roles of consumption, regulation, taxes, and costs transfers from the uninsured to the insured, there are some purpose to expect the market to be effective.

c.

Stock market:

In this market, there is adequate information and greater number of purchasers and sellers. In this market, we can expect efficient outcomes.

d.

MP3 Players:

From a country point of view, there is a good arrangement of information and competition in regards to music and MP3 players. The outcome of this will likely be effective for MP3 players. However, some companies might try to capitalize on the market power through great brand awareness and proprietary downloading equipment.

e.

Loans for students to attend college:

In this market, private players allocation are probably incompetent without government interference. Student loan markets might get affected from asymmetric information; the student will be able to know about the lenders whether he will repay the loan or not, it can be a method of opposition selection. Government interference do not resolve the opposing selection issue in the give case as participants in the student loan program is not obligatory, however, it might create a market that would not take place without any intervention.

f.

Housing:

This market is likely to be comparatively effective. Some inadequacies may take place, such as asymmetric information, the seller is more informative about the house than the purchaser and differentiated goods. However, the market has improved to alleviate these inadequacies. For instance, purchasers can employ the home inspector to assist him to focus more on the quality. Also, steps to increase more number of homes on the market to increase the competition.

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Answer 5

Chapter 3, Problem 1DQ

Summary Introduction

To determine: The market can provide efficient outcomes.

Expert Solution & Answer

Explanation of Solution

a.

Hurricane insurance and beach houses:

In this insurance market, customers would not expect disproportionate information as it would provide more problems. The probability of a hurricane is unpredictable. In such cases, moral hazard could be an factor of issue; more people will prefer to construct houses near to the beach if they have a proper hurricane insurance. However, people will expect the providers of hurricane insurance to function fairly efficient.

b.

Medical Care:

In medical care, there is considerable uneven information in the markets for insurance consumers and malpractice insurance for doctors. For better consumption, the pricing must be similar to the marginal expenses, and the insurance effect might decrease the perceived pricing for consumption of medicinal care. This could lead to consumption greater than the effective level. Considering the roles of consumption, regulation, taxes, and costs transfers from the uninsured to the insured, there are some purpose to expect the market to be effective.

c.

Stock market:

In this market, there is adequate information and greater number of purchasers and sellers. In this market, we can expect efficient outcomes.

d.

MP3 Players:

From a country point of view, there is a good arrangement of information and competition in regards to music and MP3 players. The outcome of this will likely be effective for MP3 players. However, some companies might try to capitalize on the market power through great brand awareness and proprietary downloading equipment.

e.

Loans for students to attend college:

In this market, private players allocation are probably incompetent without government interference. Student loan markets might get affected from asymmetric information; the student will be able to know about the lenders whether he will repay the loan or not, it can be a method of opposition selection. Government interference do not resolve the opposing selection issue in the give case as participants in the student loan program is not obligatory, however, it might create a market that would not take place without any intervention.

f.

Housing:

This market is likely to be comparatively effective. Some inadequacies may take place, such as asymmetric information, the seller is more informative about the house than the purchaser and differentiated goods. However, the market has improved to alleviate these inadequacies. For instance, purchasers can employ the home inspector to assist him to focus more on the quality. Also, steps to increase more number of homes on the market to increase the competition.

Answer 6

Chapter 3, Problem 1DQ

Summary Introduction

To determine: The market can provide efficient outcomes.

Expert Solution & Answer

Explanation of Solution

a.

Hurricane insurance and beach houses:

In this insurance market, customers would not expect disproportionate information as it would provide more problems. The probability of a hurricane is unpredictable. In such cases, moral hazard could be an factor of issue; more people will prefer to construct houses near to the beach if they have a proper hurricane insurance. However, people will expect the providers of hurricane insurance to function fairly efficient.

b.

Medical Care:

In medical care, there is considerable uneven information in the markets for insurance consumers and malpractice insurance for doctors. For better consumption, the pricing must be similar to the marginal expenses, and the insurance effect might decrease the perceived pricing for consumption of medicinal care. This could lead to consumption greater than the effective level. Considering the roles of consumption, regulation, taxes, and costs transfers from the uninsured to the insured, there are some purpose to expect the market to be effective.

c.

Stock market:

In this market, there is adequate information and greater number of purchasers and sellers. In this market, we can expect efficient outcomes.

d.

MP3 Players:

From a country point of view, there is a good arrangement of information and competition in regards to music and MP3 players. The outcome of this will likely be effective for MP3 players. However, some companies might try to capitalize on the market power through great brand awareness and proprietary downloading equipment.

e.

Loans for students to attend college:

In this market, private players allocation are probably incompetent without government interference. Student loan markets might get affected from asymmetric information; the student will be able to know about the lenders whether he will repay the loan or not, it can be a method of opposition selection. Government interference do not resolve the opposing selection issue in the give case as participants in the student loan program is not obligatory, however, it might create a market that would not take place without any intervention.

f.

Housing:

This market is likely to be comparatively effective. Some inadequacies may take place, such as asymmetric information, the seller is more informative about the house than the purchaser and differentiated goods. However, the market has improved to alleviate these inadequacies. For instance, purchasers can employ the home inspector to assist him to focus more on the quality. Also, steps to increase more number of homes on the market to increase the competition.

Answer 7

Chapter 3, Problem 1DQ

Summary Introduction

To determine: The market can provide efficient outcomes.

Answer 8

Expert Solution & Answer

Explanation of Solution

a.

Hurricane insurance and beach houses:

In this insurance market, customers would not expect disproportionate information as it would provide more problems. The probability of a hurricane is unpredictable. In such cases, moral hazard could be an factor of issue; more people will prefer to construct houses near to the beach if they have a proper hurricane insurance. However, people will expect the providers of hurricane insurance to function fairly efficient.

b.

Medical Care:

In medical care, there is considerable uneven information in the markets for insurance consumers and malpractice insurance for doctors. For better consumption, the pricing must be similar to the marginal expenses, and the insurance effect might decrease the perceived pricing for consumption of medicinal care. This could lead to consumption greater than the effective level. Considering the roles of consumption, regulation, taxes, and costs transfers from the uninsured to the insured, there are some purpose to expect the market to be effective.

c.

Stock market:

In this market, there is adequate information and greater number of purchasers and sellers. In this market, we can expect efficient outcomes.

d.

MP3 Players:

From a country point of view, there is a good arrangement of information and competition in regards to music and MP3 players. The outcome of this will likely be effective for MP3 players. However, some companies might try to capitalize on the market power through great brand awareness and proprietary downloading equipment.

e.

Loans for students to attend college:

In this market, private players allocation are probably incompetent without government interference. Student loan markets might get affected from asymmetric information; the student will be able to know about the lenders whether he will repay the loan or not, it can be a method of opposition selection. Government interference do not resolve the opposing selection issue in the give case as participants in the student loan program is not obligatory, however, it might create a market that would not take place without any intervention.

f.

Housing:

This market is likely to be comparatively effective. Some inadequacies may take place, such as asymmetric information, the seller is more informative about the house than the purchaser and differentiated goods. However, the market has improved to alleviate these inadequacies. For instance, purchasers can employ the home inspector to assist him to focus more on the quality. Also, steps to increase more number of homes on the market to increase the competition.