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For each of the following kinds of insurance, explain briefly what sort of behavior might be encouraged by moral hazard:
a. insurance against a home being damaged by flooding;
b. insurance against being fired from one’s job;
c. insurance for a business against the risk of suffering losses rather than earning profits.
Consider the project balances in Table P5.19 fro a typical investment project with a service life of four years. Determine the interest rate used in computing the project balance. Reconstruct the original cash flows of the project.
Illustrate what does this suggest about demand elasticity for drugs. Could it be that this experiment didn't actually measure elasticity very well and that elasticity is quite large.
Describe the free trade equilibrium. Then compute and graph the following effects of an import quota that limits imports to 100 bags.
Compare between EITC program and cash transfer welfare program in the standard income leisure model. Explain using the income-leisure model when an unemployment benefit program is successful. Do you agree that welfare programs must mandate working so..
q1. consider the following numerical example of the simple keynesian model with no government spending or taxes all
De?ne the deadweight loss of a unit excise tax on a particular good. What determines its size? Be as complete and speci?c as possible. In the market of part b, suppose that an excise tax of $1.40 per unit is charged to the sellers. Find the e?ect on ..
An engineering company just purchased a new CAD software for $8000 now and annual payments of $500 per year for 6 years starting 2 years from now for annual upgrades. What is the present worth of the payments if the interest rate is 6% per year?
The only two goods that give Bart utility are soap and calculators. When calculators cost $8 each and soap costs $2 per bar, his optimal consumption bundle is 8 bars of soap and 4 calculators. What is his income? Now the price of soap rises to $3 and..
Explain the pros and cons of introducing an urban growth boundary. In your answer be sure to make clear the objective of such a boundary and its likely ramifications. Do you support the introduction of such a boundary in the Chicago urbanized area? D..
U.S. exports as a percentage of GDP have increased, but have not nearly doubled over the last 50 years. The U.S. currently has a trade surplus. U.S. exports as a percentage of GDP have about doubled over the last 50 years. The U.S. currently has a tr..
Selling price to Yumminess at $10 per tin. The cost is $8 per tin, which includes $6 of direct material and $1.50 of direct labor. Annual manufacturing overhead is estimated at $100,000 for the expected sales of 200,000 tins. Operating expenses are p..
Suppose the production function for pasta is Q = 4kl. What is the long-run optimal input combination when Q = 16 , r = 4 , and w = 36 ?
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