Q: Suppose that an individual allocates his or her entire budget between
Suppose that an individual allocates his or her entire budget between two goods, food and clothing.Can both goods be inferior?Explain.
See AnswerQ: Suppose an investor is concerned about a business choice in which
Suppose an investor is concerned about a business choice in which there are three prospects, the probability and returns are given below: Probability………………Return...
See AnswerQ: Jon is always willing to trade one can of Coke for
Jon is always willing to trade one can of Coke for one can of Sprite, or one can of Sprite for one can of Coke. a. What can you say about Jon’s marginal rate of substitution? b. Draw a set of indiffer...
See AnswerQ: In 2007, Americans smoked 19.2 billion packs of
In 2007, Americans smoked 19.2 billion packs of cigarettes.They paid an average retail price of $4.50 per pack. a. Given that the elasticity of supply is 0.5 and the elasticity of demand is –0.4, deri...
See AnswerQ: What does it mean for consumers to maximize expected utility?
What does it mean for consumers to maximize expected utility?Can you think of a case in which a person might not maximize expected utility?
See AnswerQ: Why do some investors put a large portion of their portfolios
Why do some investors put a large portion of their portfolios into risky asset, while others invest largely in risk-free alternatives?
See AnswerQ: A recent issue of Business Week reported the following:
A recent issue of Business Week reported the following: During the recent auto sales slump, GM, Ford, and Chrysler decided it was cheaper to sell cars to rental companies at a loss than to lay off wo...
See AnswerQ: Suppose that Bridget and Erin spend their incomes on two goods
Suppose that Bridget and Erin spend their incomes on two goods, food (F) and clothing (C).Bridget’s preferences are represented by the utility function U(F,C)=10FC, while Erin’s preferences are repres...
See AnswerQ: Explain why the industry supply curve is not the long-
Explain why the industry supply curve is not the long-run industry marginal cost curve.
See AnswerQ: In a discussion of tuition rates, a university official argues
In a discussion of tuition rates, a university official argues that the demand for admission is completely price inelastic.As evidence, she notes that while the university has doubled its tuition (in...
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