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

Assignmentthe agile approach towards system analysis and

Assignment The agile approach towards system analysis and development emphasizes iterative and incremental development, in which requirements and solutions evolve through collaboration. Prepare a 1000 word essay on the r ...

Assignmentin the article at the beginning of the readings

Assignment In the article at the beginning of the readings book, Aronson talks about Social Psychology as a leap of faith, and about the imperfect nature of social psychological experiments (which is true of science in a ...

Assignmentxyz company enters into a contract with mary to

Assignment XYZ Company enters into a contract with Mary to landscape Ben's yard, using None Nursery to supply trees and buses. Kate owns the lot next to Ben's property. The landscaping is a gift from Mary to Ben, who is ...

Discussion questionconsider a group of documents that has

Discussion Question Consider a group of documents that has been selected from a much larger set of diverse documents so that the selected documents are as dissimilar from one another as possible. If we consider documents ...

Here is a link to the pdf version of dan ariellys

Here is a link to the pdf version of Dan Arielly's Predictably Irrational. http://radio.shabanali.com/predictable.pdf The Table of Contents starts on page 11. Scan through it and choose a chapter that looks interesting. ...

Question 1consider the market for a course of antibiotics

Question 1. Consider the market for a course of antibiotics. Suppose the supply of antibiotics follows P = 5 + 2Qs and the demand follows P = 20 - 2Q D . Here, Q represents antibiotics, denominated in millions of units. ...

Assignmentquestion a daoism amp confucianism as fisher

Assignment Question A: DAOISM & CONFUCIANISM. As Fisher states in our textbook, "Individuals often harmonize the apparently opposite characteristics of Daoism and Confucianism in their own lives." In what specific ways m ...

Great depression economy paperwritten assignmentplease

Great depression , economy paper Written Assignment Please provide a comprehensive answer to the following two questions: 1) Which were the main causes of the Great Depression? 2) Why did the Great Depression last so lon ...

Assignment economics read the following case study and

ASSIGNMENT: ECONOMICS Read the following case study and answer the given question. THE MACROECONOMICS OF POVERTY REDUCTION: THE CASE STUDY OF BANGLADESH Adapted: Osmani, S.R; Mahmud, W; Sen, B; Dagdeviren, H; and Seth, A ...

Assignmentwe often have difficulty understanding how our

Assignment We often have difficulty understanding how our own customs and traditions could be viewed any way other than as right. In that regard, cultural relativism (viewing a custom from the other culture's perspective ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro