Microeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280618
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 3, Problem 3TY
To determine
The case that leads to more generous production possibilities frontier for the country.
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1b. (5 pts) Under the 1990 Farm Bill and given the initial situation of a target price and
marketing loan, indicate where the market price (MP), quantity supplied (QS) and demanded
(QD), government stocks (GS), and Deficiency Payments (DP) and Marketing Loan Gains
(MLG), if any, would be on the graph below. If applicable, indicate the price floor (PF) on the
graph.
TP
$
NLR
So
Do
Q/yr
Now, let us assume that Brie has altruistic preferences. Her utility function is now given by:
1
UB (xA, YA, TB,YB) = (1/2) (2x+2y) + (2x+2y)
What would her utility be at the endowment now? (Round off your answer to the nearest
whole number.)
110
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Microeconomics: Principles and Policy (MindTap Course List)
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- In a classic oil-drilling example, you are trying to decide whether to drill for oil on a field that might or might not contain any oil. Before making this decision, you have the option of hiring a geologist to perform some seismic tests and then predict whether there is any oil or not. You assess that if there is actually oil, the geologist will predict there is oil with probability 0.85 . You also assess that if there is no oil, the geologist will predict there is no oil with probability 0.90. Please answer the two questions below, as I am trying to ensure that I am correct. 1. Why will these two probabilities not appear on the decision tree? 2. Which probabilities will be on the decision tree?arrow_forwardAsap pleasearrow_forwardnot use ai pleasearrow_forward
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