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John has a risk asset worth Y and derives utility from the consumption of his wealth. His Utility function is:
U(Y) = ln(Y)
There is the probability P that he will suffer a loss L and his wealth will be reduced to Y = W-L
A) Suppose W=100, L=36, P=0.5 , Find John's expected Utitily of income and Utility of expected income and explain that intuition behind each.
B) Now suppose that he has an offer from another person who is willing to pay him a definite amount to buy his risky property from him. How much would he be willing to accept?
C) Between buying fair insurance and selling out as in part (B) which option would he prefer? Give reason.
Explain why, when the price of good changes, the price elasticity of demand is likely to be higher or lower as a longer period of time elapses. Consider as an example the OPEC oil price increases in the 1970s.
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Where OBPA and SLGA is the opposing team’s on-base and slugging percentage. Assume two very bad teams (OBP = .200 and SLG = .250) are battling for an All-Star free agent, Ken Griffey Jr. If the teams play each other 162 times during the season, how m..
Identify the legal concept of negligence and discuss the demands necessary to establish a negligence cause of action. Be sure to pay particular attention the issues of causation, foreseability, proximate cause and the defense one may have to a neglig..
Consider an American automaker like GM with almost 400 production facilities located in 37 countries and sales in over 150 countries! To maximize profits, what decisions does GM have to make in regard to pricing and production?
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The Australian government administers two programs that affect the market for cigarettes
What are the factors that affect the supply and demand of that good or service. How do you expect the demand and supply of that good or service to change in the next year.
Suppose In a Found Ltd. just issued a dividend of $1.52 per share on its common stock. The company paid dividends of $1.20, $1.26, $1.33, and $1.44 per share in the last four years. If the stock currently sells for $55, what is your best estimate of ..
A monopolist with a straight line demand curve finds it can sell one unit at $7 each or seven units at $1 each. It's marginal cost is constant at $6 per unit. A monopolist would produce how many units? And charge? A perfect competitor would produce h..
XBC Inc. is planning to buy a new car. Model A costs $22,000 and is expected to have a life of 4 years. Model B costs $35,000 but it is expected to last 6 years. Model B provides a better warranty and it will save the company an average of $1,000 per..
Why is there currently an even greater need for effective employee communications? Describe some efforts made by U.S. firms that demonstrate the uniquely American concept of corporate social responsibility (CSR). Provide examples to support your ans..
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