User Account

All Pages

Probability of a fire resulting in a loss

Assignment Help Macroeconomics
Reference no: EM13859682

1. Suppose that an individual has $625 in housing wealth (w). The probability of a fire resulting in a loss (L) of $600 is 20 percent. Suppose that this individual's utility function is U(w) = w0.5. Calculate and graph the following values:  expected value (EV), expected utility (EU), certainty equivalent wealth (wc), risk premium, actuarially fair premium, U(w), U(EV), and U(w-L).

2. Suppose that an individual has $250,000 in housing wealth (w). The probability of a fire resulting in a loss (L) of $240,000 is 30 percent. Suppose that this individual's utility of wealth is U(w) = w0.5. Calculate and graph the following values:  expected value (EV), expected utility (EU), certainty equivalent income (Yc), risk premium, actuarially fair premium, U(w), U(EV), and U(w-L).

3. Suppose that an individual has $100,000 in housing wealth (w). The probability of a fire resulting in a loss (L) of $60,000 is 10 percent. Suppose that this individual's utility function is U(w) = w0.5. Calculate and graph the following values:  expected value (EV), expected utility (EU), certainty equivalent income (Yc), risk premium, actuarially fair premium, U(w), U(EV), and U(w-L).

4. Please graph the results, using the actual numerical solutions, from one of the problems above.

Reference no: EM13859682

Questions Cloud

What diversity trends are you seeing take root : What diversity trends are you seeing take root? What trends do you expect will stay the course?
Unique physical and chemical properties of water contribute : Explain the role so called "accidental" discoveries played in the history of science
How you will encourage your employees : As the founder and owner of an upstart electronics firm, you see the need to develop a framework for managing innovation and entrepreneurship. Explain: How you will encourage your employees to think like entrepreneurs
What is the cost sportstuff.com incurs it all warehouses : What is the cost SportStuff.com incurs it all warehouses leased are in St. Louis and what supply chain network configuration do you recommend for SportStuff.com? Why?
Probability of a fire resulting in a loss : Suppose that an individual has $100,000 in housing wealth (w). The probability of a fire resulting in a loss (L) of $60,000 is 10 percent. Suppose that this individual's utility function is U(w) = w0.5. Calculate and graph the following values:  ex..
Possible benefits and costs of members : Discuss and explain the possible benefits and costs of members joining the TPP?
Identify the biological factors that influence sensation : Identify the biological factors that influence sensation and perception
Explain some of the legal nuances of a corporation : Watch the short video on basic corporate structure and business entities. The video helps explain some of the legal nuances of a corporation and compares the corporation to other types of business entities discussed in the text
Calculate and plot fab and fc for distances x : Apply equilibrium conditions and express FC and FAB as functions of x (the distance shown on the figure). Note: FCis the overall force in pin C which isobtained by first finding CX and CY.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd