EBK ECON MICRO
6th Edition
ISBN: 9781337671828
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 4, Problem 2P
To determine
Categorize the goods as substitute, complementary and unrelated goods.
Concept Introduction:
Substitute goods are those goods which can be used in place of each other. Increase in the
Complement goods are those which can only be used together. We can’t use one good at a time. Increase in the price of one good implies the decrease in the demand of other good and vice-versa.
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Answer in step by step with explanation.
Don't use Ai.
Use the figure below to answer the following question. Let I represent Income when healthy, let I represent income when ill. Let E [I] represent expected income for a given
probability (p) of falling ill.
Utility
у в
ULI
income
Is
есте
IM
The actuarially fair & partial contract is represented by Point
X
× OB
A
Y
Suppose that there is a 25% chance Riju is injured and earns $180,000, and a 75% chance she stays healthy and will earn $900,000. Suppose further that her utility function is
the following:
U = (Income) ³.
Riju's utility if she earns $180,000 is _ and her utility if she earns $900,000 is.
X
56.46; 169.38
56.46; 96.55
96.55; 56.46
40.00; 200.00
169.38; 56.46
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