Relationship between risk aversion-internal interest

Assignment Help Microeconomics
Reference no: EM131904590

1) Explain the relationship between risk aversion, internal interest rates, and the prices that people with different risk aversions would be willing to pay for the same stock.

2) Suppose you're in the market for a new sedan. If the car is a "lemon", it will be worth $15,000. If the car is a "peach", it will be worth $25,000.

a. If you think half the sedans on the lot are "lemons", what should you be willing to pay for a new sedan?

b. If you think 60% of the sedans on the lot are "lemons", what should you be willing to pay for a new sedan?

c. If you think 80% of the sedans on the lot are "lemons", what should you be willing to pay for a new sedan?

Reference no: EM131904590

Questions Cloud

Discuss the advantages of completing the project as a group : Reflection and self-awareness are important exercises when practicing as a clinical social worker. Journaling is not only useful for clients.
Describes the benefits of the areas you selected : Describes the benefits of the areas you selected, the synergy that exists between them, their potential impact on recidivism, and ways you would go about
Give a brief review of article as it was written by author : Provide the reference where you obtained the current event article and the author. Give a brief review of the article as it was written by the author.
Contrast the underlying theories of the interventions : Respond to a colleague's intervention choice that differs from yours. Contrast the underlying theories of the two interventions.
Relationship between risk aversion-internal interest : Explain the relationship between risk aversion, internal interest rates, and the prices that people with different risk aversions would be willing to pay.
What did you learn about particular period in france history : What did you learn about this particular period in France's history? What was one (or some) of the artworks that stood out for you in particular?
Example of structural-cyclical-frictional unemployment : Identify each case as an example of structural, cyclical, or frictional unemployment
Write the set of all integer solutions to the equation : An integer solution to the equation 3x + 4 = 7y, is an ordered pair of integers (x, y) that satisfies the equation. Write the set of all integer solutions
Describe a organized crime embezzlement : Describe a organized crime EMBEZZLEMENT and Describe how this crime impact society - Identify which criminological theory best explains the behavior

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

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!

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