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LoJack and Insurance Companies. Consider the application External Benefits from LoJack. Suppose all vehicles in a state carry theft insurance. The benefit from reduced vehicle theft goes to insurance companies because they replace fewer stolen vehicles. Insurance companies do not offer any discounts for customers who install LoJack. The cost of LoJack is $100 per vehicle per year. To simplify matters, assume that the private benefit of LoJack is zero, so the social benefit equals the external benefit. (Related to Application 3 on page 650.)
a. Suppose a single insurance company provides automobile insurance to all vehicles in the state. Will the insurance company provide free LoJacks to at least some of its customers? Explain.
b. Suppose that there are 20 companies in the state, each with a market share of 5 percent. Will the insurance company provide free LoJacks?
c. What is the threshold number of insurance companies the number at which each insurance company will be indifferent about providing free LoJack systems?
What happened to the marginal product of labor between 1960 and 2007 calculate the marginal product numerically as the extra output gained by adding 1 million workers in each of the two years.
Two countries, Richland and Poorland are described by the Solow growth model. They have the same Cobb-Douglas production function F(K,L) = Kf(EL)1-f. Poorland saves 10% of its income. Richland and Poorland have the same levels of popualtion growth..
Consider a bank that has assets of 100, capital of 20, and short-term credit of 80. Among the bank's assets are securitized assets whose value depends on the price of houses. These assets have a value of 50. Set up the bank's balance sheet.
if you borrow $5000 and agree to repay the loan in five equal annual payments at an interest rate of 11%. what will be the annual payment be what if you make the first payment on the loan at the end of second year
Explain what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well): a. The price of Coke decreases. b. Average household income falls from $50,000 to $43,..
U(C,1day-L)=4C2/3(1day-L)1/3, where C is the amount of consumption and L is the number of hours worked. If the price for consumption is $9, the wage rate per hour is $6, initially the consumer had $162 and 24 hours as time endowment;
Assets Liabilities Deposits at The Fed $40,000 Checkable Deposits $500,000 Cash $10,000 Net Worth /Capital $20,000 Loans $300,000 Securities $150,000 Fed Stock $20,000 1. What is the reserved ratio
Explain what you will do during the implementation event to tilt the balance away from the presentation toward participation.
Suppose the firms in the economy were to produce fewer goods and services .How do you think would affect house hood spending on goods and services(use the circular flow model to analyze this question)
Determine the quantity that would be produced at this price and the maximum profit possible.
What are they? What are their similarities and differences? Which of these models do you find the most plausible?
In auditing intangible assets, an auditor most likely would review or recompute amortization and determine whether the amortization period is reasonable in support of management's financial statement assertion of:
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