ssume that, after the auto insurance mandate, 50% of purchasers of auto insurance were expected to be high-risk and 50% were assumed to be low-risk. Would both markets for insurance clear? Why o
Q: e. Finally, assume the consumer is part of a partial insurance plan with a copayment provision. Her…
A: Your costs for health insurance aren't repaid by protection. Out-of-pocket costs incorporate…
Q: Question 6 : If disequilibrium exists in a market : O b ) it must be because the government has…
A: 6 An equilibrium is a situation where all the possible gains from the trade are exhausted. If there…
Q: Pls help with below homework. Calculate the value of getting 1 000 000 EURO today and an…
A: *Hi there , as per our guidelines we are only allowed to solved 3 sub parts at a time . Kindly…
Q: QUESTION 8 Which of the following is correct? O B. When AP is rising MC is falling, and when AP is…
A: MP refers to the Marginal Product, MP of input, say labor is defined as the one extra output that a…
Q: Tom's income is 32. He consumes a single consumption good, C, which has a price of 2. His utility…
A: In the question above, it is given : Tom's income is 32. Tom consumes one single good, C. C's…
Q: stricted. National travel was also restricted as was things that one usually does on a vaction, e.g.…
A: Utility Function : U = v0.1o0.9 Prices Ratio = Pv/Po = 1 Income : I = 300,000 Budget Constraint :…
Q: Suppose that U = min{X, 5Y}, where X is units of good X and Y is units of good Y. The price of good…
A: The utility function shows that X and Y are complements which are consumed together in fixed…
Q: 3. Suppose we are in a society where the social rate of time preference is 5% per year. The discount…
A: Since you have asked only Part C and D, we will answer both the questions for you. Social Rate of…
Q: 3. Suppose that the price of education increases. Does the total expenditure for healthcare rise or…
A: Elasticity of demand measures the responsiveness of quantity demanded changes as a result of price…
Q: In which of the following situations will an individual's purchasing power be unaffected? Select…
A: Purchasing power is the worth of a cash communicated with regards to the quantity of labor and…
Q: Suppose that hypothetical nation Insurancia passes an insurance mandate. This mandate requires…
A: In insurance market there are two problems exist one is adverse selection ( unequal information )…
Q: 4. Columns 1 through 4 in the following table show the marginal utility, measured in utils, that…
A:
Q: Suppose that in 2010 the number of births is temporarily high. How does this baby boom affect eh…
A: Demand is defined as an economic term that refers to a customer's ability to purchase goods and…
Q: IF demand equation is Qdx=20+3M assume that the income of individuals are 30ORO. What will be the…
A:
Q: Which of the following explains "market failure" (or non-via O a. consumption-smoothing. O b. moral…
A: Hi! thanks for the question since you have asked the 10th question so I am answering that only.
Q: Suppose that the representative consumers pref- erences change, in that his or her marginal rate of…
A:
Q: O Question 13 Ikrs of Leisre Income The above image will be used for questions 13-15. Point D is…
A: We will answer the first question since the exact one was not specified. Please submit a new…
Q: If the current price of a product rises, what happens to the demand for that product? It increases.…
A: Demand and Quantity Demanded are two different concepts. Change in Price results in change in…
Q: Let MUA = z = 10 − x and MUB = z = 21 − 2y, where z is marginal utility per dollar measured in…
A: Given information: MUA = 10 − x = z MUB = 21 − 2y= z Consumer has spendable income $10 on two…
Q: The current price of chicken is $5 per pound and the current price of beef is $10 per pound. Raúl’s…
A: Here, given information is: price of chicken: $5 price of beef: $10 MU of chicken: 10 MU of beef:…
Q: 3. Consider the following utility function, u (x1, 12) = min [lV¤1, Varz), where a > 0 (a) in…
A: Answer; 3. The given utility function is, • u(x1, x2) = min{√x1, ✓(a.x2)} Suppose prices are p1, p2…
Q: everal variables that contribute to today's food security problem. In today's instance, what are the…
A: COVID-19 has badly affected all business world wide has led to widespread and Sevier global food…
Q: QUESTION 2 Consider a consumer named Ahmed who buys only two items, shawarma and coffee. If the…
A: The economics as a study is based upon the idea that the economies have a limit to the amount of…
Q: Each individual's lifetime budget constraint is given by C1 + C2/(1 + r) = Individuals choose…
A: *Answer:
Q: Let us represent consumption in the next period on the vertical axis and consumption this period on…
A: It is given that there are two periods present and future. Income for future period (Y2) is given on…
Q: Assume the following behavioral equations for a macroeconomy: C = 100 + .9Yd ,I = 50, T= $100 and G…
A: Answer to the question is as follows :
Q: Suppose we are in a society where the social rate of time preference is 5% per year. The discount…
A: Social Rate of Time Preference(SRTP) is a measure of finding out the willingness of the society to…
Q: If we assume the sizes of the slopes are known, and if we apply an assumption for a given level of…
A: The given demand function is as follows: Here, Bx is the slope of good x. Bm is the slope of the…
Q: What is Alonso’s Principle of Median Location?
A: Continuous reference is made to the Alonso-Muth model of the urban land and real estate markets, and…
Q: The random walk of consumption states that: A. consumption this year is not a good forecast of…
A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…
Q: Explain the concept of the Expected Utility Hypothesis (EUH) and state all relevant assumptions. Use…
A: When there is uncertainty about the result, this theory estimates the likely utility of an action.…
Q: A consumer has utility u(x,y,z)= ln(x) + 2ln(y) + 3ln(z) over the three goods, x,y and z and pZ = 1…
A: u(x,y,z)= ln(x) + 2ln(y) + 3ln(z) t = 29 hours z=30 units
Q: Uncerainity How do unanticipated changes affect the economy's output? How do anticipated changes…
A: Uncertainty occurs when the possibility of a future event cannot be calculated or is indefinite.
Q: 1) Household spending on education is included in consumption of services. Select one: O a. True O…
A: Household consumption expenditure is of two types, consumption of goods and consumption of services.
Q: b. How does the increase in the tax rate affect the optimal choice of consumption (in the current…
A: There are 2 possible cases for the given situation where increase in tax rate affect the optimal…
Q: Slope is sometimes defined as rise over run. If we raise the price of an appointment by $50 and the…
A: Given: Price of an appointment rises by = $50 New quantity increases by= 10 units Generally, price…
Q: Suppose the president is attempting to decide whether the federal government should spend more on…
A: Note: Since the first question is done I am answering the second question. Answer (2): B (whether…
Q: . Explain the interpretation of a utility function and why such a function should be increasing. is…
A: Hi there , as you have posted multiple question as per our guidelines we will only solve the first…
Q: Which of the following statements about the Prospect Theory is correct: O a. Prospect Theory relates…
A: The theory that depicts the way in choosing among various alternatives and estimation of the…
Q: Suppose the market for auto insurance is made of up two types of buyers: high-risk and low-risk.…
A: ANSWER Suppose the market for auto insurance is made of up two types of buyers: high-risk and…
Q: If occupancy is higher than the equilibrium level, what are you likely to observe in the market for…
A: Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: Suppose the president is attempting to decide whether the federal government should spend more on…
A: In microeconomic, the chance cost of an action or choice is that the deficiency of serious worth or…
Q: TQuestion 1 - All else equal, a car insurance plan that offers less full insurance coverage will…
A: In economics, a situation of asymmetric information results in market failure due to uneven…
Q: 4. True or False: The most importart thing that happens in the Relationship stage is gaining insight…
A: At the marketplace, customers are the primary participants to make economic activities as a producer…
Q: Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if she spends her…
A: * SOLUTION :- *(8)
Q: )Suppose a driver has a 6% of having one accident a year. In case of an accident the value of the…
A: Given Probability of having car accident (p) = 0.06 Initial value of car =25000 After accident,…
Q: TABLE 12.1 Two Stage Least Squares Estimates of the Demand for Cigarettes Using Panel Data for 48…
A: The price of cigarette per pack = $7.50 The estimated increment in the price of cigarettes by…
Assume that, after the auto insurance mandate, 50% of purchasers of auto insurance were expected to
be high-risk and 50% were assumed to be low-risk. Would both markets for insurance clear? Why or why not?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Suppose that the graph below illustrates the demand for healthcare services given a coinsurance plan of 25%, what would be the expected change if the participant changed jobs and received a plan with 100% coinsurance?Anita bought a new scooter for $500. She is deciding whether she should insureher scooter against theft. She has recently read in the news that one out of 10 scooters arestolen in her town. She can buy scooter theft insurance at the price of 12 cents per $1 ofinsurance. How much insurance will Anita buy if her utility function is U(C) = 2C + 100?and you have a 10% chance of getting sick. Your income when sick is $0 and your income when healthy is $100. 1. Assume your utility over income is U=T ¥ 1. Graph your utility and income with income on the x-axis and utility on the y-axis. Show your income/utility when healthy and sick on the graph. 2. calculate your expected income. Show on graph. 3. calculate your expected utility. Show on graph. 1. Now you are offerred health insurance by Prof. Grossman's Totally Full and Fair Insurance Company. For a premium of $20, you will get a payout of $50 if you get sick. 1. Is the insurance company's name accurate (is this actuarially fair and full)? 2. What is the expected payout from this insurance? 3. What is the Income when sick and income when healthy under insurance? Show on your graph 4. What is the expected income and expected utility under this insurance? Show each on your graph 5. Propose a full and fair insurance given your 10% chance of getting sick and your healthy and sick…
- A person's utility function is U = C1/2 . C is the amount of consumption they have in a given period. Their income is $40,000/year and there is a 2% chance that they'll be involved in a catastrophic accident that will cost them $30,000 next year. a. Calculate the actuarially fair insurance premium. What would your expected utility be if you were to purchase the actuarially fair insurance premium? b. What is the most you would be willing to pay for insurance, given your utility function?Assume a consumer's demand for a medical service is as follows: Q = 100 - Pp where Pp is the out-of-pocket price she actually faces. She is considering four different insurance options: uninsurance, full insurance, a 50% coinsurance plan, and a copayment plan with a $25 copay. Assume this service has a list price of PL = $70. Calculate Q under each insurance plan. Please fill in the final answer without showing the middle steps (a number only, without any extra space, symbol, word, etc.) If the customer is uninsured, Q= • If the customer is fully insured, Q= • If the customer has a 50% coinsurance plan, Q= • If the customer has the copayment plan, Q=Economists define the 'certainty equivalent' of a risky stream of income as the amount of guaranteed money an individual would accept instead of taking a risk. The certainty equivalent varies between individuals based on their risk preference. Consider a risky bet that involves a 50-50 chance of losing $5,000 or winning $5,000 for an individual with starting income of $50,000. Calculate the certainty equivalent income that provides the same utility as this bet for individuals with these different utility functions: a. U(1) Vi b. U(1) = In(1) where In represents the natural logarithm function C. U(I) = -1/1 d. What can you conclude about the relative level of risk aversion for these three individuals? e What would be the certainty equivalent income for this bet for a risk neutral individual? f. What is the likelihood that a profit maximizing risk neutral insurance company would be willing and able to purchase these bets from the individuals in a, b and c? Explain.
- Continue from Question 16: You make $20,000 per year, and there's a $100 insurance expense to mitigate a 1% risk of a $10,000 accident. Utility without insurance and no accident = 2000 Utility without insurance with accident = 1500 What is the expected utility "without" insurance? Utility "2000" "1999" "1500" 1999 2000 1995 1500 $10,000 $19,900 $20,000Suppose a company offers a standard insurance contract with a premium (r) of $2,000 and a payout (q) of $10,000. Suppose that Adelia earns a healthy state income of $70,000, a sick state income of $50,000, and has a 20% chance of becoming ill. For Adelia, this insurance contract would be: A. actuarially fair and partial B. actuarially fair and full C. actuarially unfair and full D. actuarially unfair and partialSuppose Diane's utility function is U=- Vincome . Diane earns an income of $102,400, but there is a 15% chance that she will get sick and have a $62,400 medical bill. The health insurance company, DenialCare, will offer her a health insurance policy to pay for her medical bills. What would an actuarially fair premium be and what is the maximum she would be willing to pay for the insurance?
- Economists define the ‘certainty equivalent’ of a risky stream of income as the amount of guaranteed money an individual would accept instead of taking a risk. The certainty equivalent varies between individuals based on their risk preference. Consider a risky bet that involves a 25% chance of losing $5,000 or a 75% winning $5,000 for an individual with starting income of $50,000. Calculate the certainty equivalent income that provides the same utility as this bet for individuals with these different utility functions: 1. U(I) = I 2. U(I) = I–√ 3. U(I) = ln(I)where ln represents the natural logarithm function Type the numerical answers in the corresponding numbered boxes below. Round your answers to two decimal places. Do not use $ or , in your answers. (for example, enter 45223.45 or 46500.00) What can you conclude about the relative level of risk aversion for these three individuals? Explain.Is the decision to buy pet insurance strictly an economic decision? Explain.Explain why the variance of an investment is a useful measure of the risk associated with it
