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Question 1:
Who wants to play the Mahoney Lottery? Tickets cost $5 to play, and you get to pick a number between 1 and 20. If you guess right, you win $100. If you guess wrong, you win nothing. In either case, you must pay the $5 to play. What is your expected payoff if you play this game?
Question 2:
Consider the same lottery as in question 1. You have a utility function characterized by u(c)=c^(1/2). If you have just $5 before you play the game (so you have just enough to play), what will your expected utility be if you decide to play the game?
Question 3
Again, you currently have $5 and are deciding whether or not to play the Mahoney Lottery. What will your utility be if you don't play the game? Should you play?Answer
You should playYou shouldn't playYou are indifferent between playing and not playing
Question 4
You still have a utility function given by u(c)=c^(1/2), and currently have $5. If I charge $5 for a lottery ticket, how much would the prize have to be for you to be exactly indifferent between playing and not playing (using expected utility framework).
What is the total product function for Dimex? The average product function? The marginal product function?
Determine the firm's minimum cost of making unit of output and the wage is €1 per hour and the capital rental charge is €1 per hour.
You work for the company that is being accused of monopoly behavior, given its large size. Comparisons are made to the industry standard, where each establishment has on average about 15.1 employees.
An industry with twenty companies but the CR = 80 percent is called "high concentration", for a concentration ratio of 80 to 100% is viewed as high concentration.
Assume you were appointed economic adviser to a less developed country in Africa. The country seeks to encourage capital formation and wants to raise the rate of saving of its own residents and encourage foreigners to invest in their country.
Assuming no population growth or technological progress, find the steady state capital stock per worker , output per worker, and consumption per worker as a function of the savings rate and the depreciation rate.
Stock registers an unexpected price decrease, Evaluate the value of your delta-hedged portfolio.
Obtain price elasticity of demand for good one. Obtain income elasticity of demand for good and find the amount of compensation needed for Hicks compensation
Constrained optimisation model
Examine of taxation is complex and the issues you should address when looking at taxes are: the revenue increased, the equity of tax, and the efficiency of the tax.
If the government imposes a $1 per-unit tax, how do the marginal, average total, and average variable costs change? What if instead the government imposes a $100 per-firm tax?
The first acre can produce 1000 bushels of wheat, the second acre 900, the third 800, and so on. How much revenue will each acre generate? what are the TR and MR for each acre?
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