Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

1. Assume that Betsy’s utility function is given by equation U=Y0.3 where Y is measured in thousands of dollars. Betsy’s current job pays her $20,000 (Y=20) per year and she can earn this amount next year with certainty. Betsy is offered a different job but in this new job,

Betsy has a 50% chance of earning $36,000 (Y=36) and a 50% chance of earning only $15,000 (Y=15).

a) Should Betsy take the new job?

b) Does your answer change if Betsy’s utility function is U=Y0.9? Why?

c) Does your answer change if Betsy’s utility function is U = Y1.25? Why?

2. Many states have scratch offs with several different monetary payoffs. For ex, the “$500 a week for life” in New York offers the payout and odds structure noted below.

(a) What is the anticipated value of playing, supposing you live 60 more years and there are 52 weeks in every year.

(b) The cost of playing is $1. If your utility is U= V + Y, where V = entertainment value in dollars, how much V do you need to receive with certainty in order to play?

(c) Consider a dissimilar structure where you pay $1 and the payout is $250 with odds of winning equal to 1 and 323. Also, U = V + Y.85. What is the minimum entertainment value in this case?

Payout                   Odds

$1                      1 and 10
$2                      1 and 15.15
$4                      1 and 62.5
$5                      1 and 125
$10                    1 and 100
$20                    1 and 166.67
$40                    1 and 2,100
$100                  1 and 50,400
$250                  1 and 126,000
$500/wk             1 and 7,938,000

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91511

Have any Question? 


Related Questions in Microeconomics

Assignmentafter reading chapters 1-3 of shanes finding

Assignment After reading chapters 1-3 of Shane's Finding Fertile Ground, refer back to Table 1.1: Percent of New Firms in Selected Industries That Have Become Inc 500 Firms(p. 3). Identify two specific companies by name: ...

Principles of microeconomics assignmentquestion one the

PRINCIPLES OF MICROECONOMICS ASSIGNMENT Question One: The following table gives a total utility schedule for Michael who consumes sodas. The price of each can of soda is $50. a) Copy and complete the table. Number of can ...

Assignmentchoose an ethical issue to write about you may

Assignment Choose an ethical issue to write about. You may choose from the list below, or, with approval from the instructor, select a different socially relevant topic. It is recommended that you choose a topic that you ...

Discuss the security issues in addition to simple customs

Discuss the security issues (in addition to simple customs requirements) that your company must consider when transporting customers' goods across international borders. Do the markets your company usually serves make th ...

Businesses should examine various internal methods of

Businesses should examine various internal methods of financing or nonbank sources of credit as opposed to obtaining a bank loan. Read "Entrepreneurship In Action - Where Do we Turn Now?" on page 504. Answer these questi ...

Assignmentthe soft drink and juice beverage industry is

Assignment The soft drink and juice beverage industry is very competitive with more companies entering the market each year. This week our case study is the Dr Pepper Snapple Group, a major player in the industry. Your a ...

These questions are about the usa industrialization and

These questions are about the USA Industrialization and Economic Development. At least 200 words for each question! 1. What is meant by the term "development" inneo-classic economics? How might your answer to this questi ...

Question - determined that the cost of supplies on hand was

Question - Determined that the cost of supplies on hand was Tk. 1500 and Tk. 1200 of supplies had been used during the month.

Assignment global business today - the hofstede studyrefer

Assignment: Global Business Today - The Hofstede Study Refer to Hofstede model in Chapter 4 of the textbook and the Global Business Today Interaction located below, and complete this assignment. Note: You must have a Fla ...

Precision electronicsmary white was a supervisor of an

PRECISION ELECTRONICS Mary White was a supervisor of an assembly department in Precision Electronics Company. In recent weeks, White had become convinced that a certain component Z-497, could be produced more efficiently ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate