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please answer a & b
In a used car market there are two types of cars: bad (B) and good (G). Assume that the utility from a bad car is Ub= Php100, and the utility from a good car is Ug = Php1000. Jaebeom, the owner of IGOT7 Used Cars Company, buys cars from the general public for his lot (assume he just keeps them on his lot for now). The owners of the cars who are selling to Jaebeom know the qualities of the cars they are selling, but Jaebeom does not.
a. If car type is observable, what is the price paid for good and bad-type cars?
b. Describe the equilibrium in the market assuming that Jaebeom can only offer the same buying price to
any car in the market (i.e. cannot discriminate among sellers). What is the equilibrium used car price?
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- ia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend’s company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8 Calculate Jia’s costs associated with going out to dinner with her friend. Calculate Jia’s benefits associated with going out to dinner with her friend. Based on the information, Jia should...In Hayward, there are 100 people who want to sell their used cars. The problem is that nobody except the original owners know which are which. Owners of lemons will be happy to get rid of their cars for any price greater than $200. Owners of peaches will be willing to sell them for any price greater than $1,500 but will keep them if they can't get $1,500. There are a large number of buyers who would be willing to pay $2,500 for a peach but would pay only $300 for a lemon. When these buyers are not sure of the quality of the car they buy, they are willing to pay the expected value of the car, given the knowledge they have. What is the minimum probability for a used car to be a peach such that peaches stay in the market? Ő O 0.33 0.67 0.55 0.5Billy's income Is equal to / = 100 and his utility function is U = [?. There is a 10% chance that he will be in an accident next year with his skateboard that will cause $70 worth of damage. Get the risk premium for Billy. b. An Insurance company offers a policy that will cover all the damages if an accident occurs Calculate the fair price for the insurance. %3D a.
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- Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend's company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8.Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend’s company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8. . Calculate Jia’s costs associated with going out to dinner with her friend. Calculate Jia’s benefits associated with going out to dinner with her friend. How I can resolve this problemplease answer all multiple choice question, thanks. 1. Suppose an insurance company wishes to separate out drivers based on whether they are high-risk or low-risk drivers. It can do this by offering two different pricing schemes: one the appeals to low-risk drivers and another that appeals to high risk drivers. Which of the following pricing schemes would best appeal to a high-risk driver? NB: a deductable is the amount that the driver would have to pay in the event of a claim: a high premium but low deductable b. a high premium and high deductible c. None, high risk drivers prefer not to take out insurance. d. a low premium and high deductable 2. The incentive of imperfectly monitored workers to shirk can be reduced by: a. lower levels of monitoring and lower wages b. lower levels of monitoring and offering year-end bonuses c. higher levels of monitoring and offering year-end bonuses d. higher levels of monitoring and lower wages 3. Research has shown that investors in the stock…
- Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $129 for the suit: Store Travel Time Each Way Price of a Suit (Minutes) (Dollars per suit) Local Department Store 15 129 Across Town 30 86 Neighboring City 60 63 Juanita makes $50 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $50 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Complete the following table by computing the opportunity cost of Juanita's time and the total…Your own a chocolate producing company which can advertise on both television (T) and internet(I). The effect of TV and online commercials on sales is again given byS(T,I) = 500 + 48T−6T2+ 112I−6I2+ 4TI. You have a budget of $25 that you can spend on T and I. The price of aTV commercial is $12per unit and the price of an online commercial is also $12 per unit. 1. Determine the optimal level of TV commercials T and online commercials I if you have to spend all of your budget. You should provide two methods to solve this, by direct substitution and by setting up the Lagrangian. Is the Lagrange multiplier positive or negative? Give an intuitive interpretation of why this is the case? 2. Now determine the optimal level of TV commercials T and online commercials I if you DO NOT have to spend all of your budget. Do you obtain the same answer as subquestion 5.1? What is the Lagrange multiplier equal to in this case? Discuss.You read about a traveling situation in which some airline passengers seem toget a “fast pass” through security and move effortlessly through the boarding process, while other passengers are waiting in long lines. In this example, the travellers who are moving quickly through the boarding process are probably: a) VIP passengers waiting longer more in an inconvenient lines b) Passengers who value time and convenience and are willing to pay additional fees for the privileges and other services c) Loyal passengers whom they knew beforehand in which line to go to avoid delays and inconveniences d) Government officials who are seated in the executive area