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Economics and Ethics : Morality and ethics are powerful motivations to behavior. Thouh, economists suppose that rationality is a function of demonstrable self-interest. That means, material well-being B greed if you will. The acceleration of corporate scandals by the early part of this century seems to suggest a disregard for issues other than material well-being by lot of people who were in positions of authority in various major companies (Enron, Worldcom, Tyco etc.) Self-interest when measured purely in dollars and cents will often give rise to unethical, immoral, and perhaps even illegal conduct.
Attitude towards Risk: Let's assume the following: The utility function • has the single argument "wealth" measured in monetary units, • is strictly increasing, and
Consider the following insurance market. There are two states of the world, B and G, and two types of consumers, H and L, who have probabilities pH =0.5 and pL =0.25 (high and low
When measuring price levels in the economy (such as when calculating the CPI index), why is a weighted average used? Because we require giving greater emphasis to prices at whi
The Technology of Production * The Production Process - Combining inputs or the factors of production to attain an output * Categories of Inputs (or the factors of prod
Returns to Scale Measuring relationship between scale (size) of a firm and output 1. Increasing returns to scale: output more than doubles when all the inputs are doubled
Disposable Personal Income The amount of cash remaining after taxes are removed that an individual has the opportunity to spend.
discuss how economic theory of marginal utility explains the optimum pattern of consumption for an individual consumer
A consumer purchases food (X) and clothing (Y). Her utility function is given by: , income is $100 and the price of food is $1 and the price of clothing is Py. a. Derive the equ
Marginal Product (MP) of a Factor: From the above mentioned production function, immediately we can study the effect on total output when there is a variation in labour utlili
consumer choice involving risk
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