uppose that we can describe the world using two states and that two assets are available, asset K an asset L. We assume the asset’s future prices have the following distribution State Future Price Asset K Future Price Asset L 1 $55 $60 2 $45 $30 The current price of asset K is $50, and the current price of asset L is $50.
Q: In 2013, a family buys a home for $250,000. By how much will the consumption component of 2013…
A: Gross domestic product is the total market value of goods and services produced domestically during…
Q: Problem 1 Cefel Furniture is a small furniture shop that focuses on making kitchen chairs. The…
A: The amount of total output that is divided by the volume of inputs is frequently referred to as…
Q: メ 4 3 3 4 po ductinn cost. ties the two proquits tejether, nhat mplicity. there is ass ume no te…
A: Production costs allude to the costs an organization brings about from assembling an item or…
Q: 15. There is a shortage of bottled water in California, and the governor decides that the government…
A:
Q: An actuarially fair premium is set equal to the insurer's expected payout, assuming no admin-…
A: Due to asymmetrical information market failure can be arises as both parties do not have the same…
Q: please elaborate. thanks.
A: Inflation means an increase in the price level of goods and services in an economy. It means the…
Q: Two firms, A and B, each currently dump 70 tons of chemicals into the local river. The government…
A: Hi! Thank you for the question As per the honor code, We’ll answer the first question since the…
Q: How does the stock market affect consumption according to the permanent-income hypothesis? Is this…
A: Answer -
Q: Table 24-7. The table below applies to an economy with only two goods – hamburgers and hot dogs. The…
A: Cost of living is measured by consumer price index which fixes the quantities of the goods constant.
Q: What are the two different classifications of tariff? What iseach designed to do?
A: Trade is defined as the exchange of commodities and services across the boundary of the country.…
Q: 1. Rhodies Road Bikes are at it again... This time they're building light weight alloy frames. The…
A: A cost is basically the worth of money that has been spent to create something or supply a service…
Q: The graph represents consumption (C) as a function of disposable income (DI). Assume the consumption…
A: MPC = Marginal Propensity to consume.
Q: In the diagram below, if legislation allows Angela to be at point F, if Angela and Bruno can bargain…
A: Indifference Curve is the curve that shows a person’s utility level for different combinations of…
Q: A decrease in proportional consumption tax makes the budget constraint A. flatter…
A: Budget constraint is combination of consumption which someone can afford with given prices and…
Q: Impact of Inflation on Zimbabwe’s Balance of Payments
A: Balance of payment is the account that records the monetary transaction occured between nations .…
Q: Superior Trading Co. operates in a competitive market, and decides which price to charge their…
A: Here, it is given that the Superior Trading Co. Make economic activities in the competitive market.
Q: Nature ProbalH)-5/8 ProbalH)-3/8 Player 1 Player 1
A: In the above incomplete information extensive game , player 1 has the information about the nature…
Q: Erhibit HW2.4: Total Revenues and Total Costs for a Representative Competitive Firm Money TC C61 TR…
A: Total cost is the sum of fixed cost and variable cost. Fixed cost is constant and does not depend on…
Q: If the hourly wage is $6, this business should hire workers; and if hourly wage is $31, this…
A: Equilibrium labour is determined where MR>= MC= Wage where Wages are 6 and 31
Q: I need help with 5.1 A only . Question is … Tustrate the following with supply and demand curves: 8.…
A: The Demand Curve is the number of goods a consumer is willing to produce. The supply curve is the…
Q: The residents of the town Ectenia all love economics, and the mayor proposes building an economics…
A: Demand = 12-P Variable Cost = 0 Fixed Cost = 2,000,000
Q: Assume that the total cost (fixed costs and variable costs) of producing 15,000 units of a good…
A: The cost plus mark-up is the difference between actual price of product and the cost of production.…
Q: Macroeconomic policies, both fiscal and monetary, are essentially Select an answer and submit. For…
A: In an economy, macroeconomic policies are the action of the government as well as the central bank…
Q: phenomenón Explain the resource curse phenomenon and discuss how its effects can best be mitigated…
A: The resource curse, also known as the abundance paradox or the poverty paradox, is a phenomenon in…
Q: If a 10 percent increase in price causes a 3 percent decrease in quantity demanded, Which of the…
A: Concept: The elasticity of demand refers to the change in the quantity demanded due to a change in…
Q: How about business and industry, do they have too much power or too little power?
A: Meaning of Economics: The term economics refers to the situation under which there remain…
Q: ) In the very long run, across the next fifty years, a country’s economic standard of living as…
A: 1) Productivity growth, demographic changes, and labour force participation are all factors that…
Q: Q#13) The former Tea Party and Trump factions with the Republican Party would like…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Average propensity Average propensity income ($) Consumption ($) Savings ($) to consume (APC) to…
A: All Blanks answers given below,
Q: What is countertrade?
A: International trade refers to the flow of goods and services that is place between different…
Q: Question 3 Demand in a domestic market is represented by the curve P = 200 - Q Supply is represented…
A:
Q: What is the optimal plan for both the players? Solve using: 1. Pure/Mixed Strategy 2. Domination…
A: Pure strategy is the particular strategy that a player would choose to play over and over again…
Q: Persuasive essay about money laundering in the Philippines 1000 words
A: Money laundering is the illicit technique of making significant sums of money obtained through…
Q: (millions of tons) Key Torland Leeland 20 15 10 5 5 10 15 20 25 Honey (millions of tons) Figure 2…
A: Comparative advantage is when a country is able to produce a particular good or service lower…
Q: The price elasticity of demand is a measure of
A: In economics, demand is defined as a customer's willingness and ability to consume a specific good.…
Q: in the blank using the number that corresponds to the correct word or phrase in the word bank below…
A: Gross domestic product estimates the worth of labor and products delivered inside a nation's…
Q: Please provide a short and concise explanation of the following question: What is the term…
A: A constant variable in economics is defined as the one whose value does not change or does not alter…
Q: Suppose that there are only two countries in the world: Localia (which is us), that uses the…
A: supply and demand, in financial aspects, the connection between the number of goods that makers wish…
Q: A country has a rate of growth (g) of 0.75 %, a debt-to-income of 94% and a primary deficit of 0.9%…
A: The percentage change within the value of all products and services produced in a very country over…
Q: Some policy makers have claimed that the U.S. government should purchase illegal drugs, such as…
A:
Q: A farmer works on a plot of land owned by a landlord. The figure below illustrates the feasible…
A: Given graph
Q: Calculate total quantity demanded (Qd) of Stouffers frozen meal that would be demanded given demand…
A: The equation of quantity demanded is already given and all the values of the variables are also…
Q: American Heart Association (AHA) announcement about corn Change in the demand for barley Change in…
A: Answer- (a) Change in the demand for barley.
Q: What is deadweight loss? How is it illustrated on a demand and supply diagram? GIve an example of…
A: Dead weigh loss is loss of total surplus in the market.
Q: [16] Operating in the short run with one fixed input and one variable input, the marginal product of…
A: Since you have posted multiple questions, as per the guidelines we can solve only one question per…
Q: (1) For demand function Q, = a-bP and supply function Q, = dP-c , using Cramer's rule determine…
A: The Cramer's rule is a technique for using determinants to solve a system of linear equations.…
Q: Suppose that there are only two countries in the world: Localia (which is us), that uses the…
A: The price of the domestic currency in relation to another currency is known as the foreign exchange…
Q: One of these is NOT TRUE about Cost-utility analysis: a. It measures outcomes in Quality Adjusted…
A: Cost-utility analysis ( CUA ) is one kind of monetary assessment that can assist you with…
Q: Consider the following numerical example of the Solow Growth Model: • s=0.25 • z=1 • FIK,N)=K0.3N0.7…
A: Production function: Y = F(K,N) = K0.3 N0.7 => Y = K0.3 N0.7 Divide both sides by N => (Y/N)…
Q: 1. A firm has the possibility of charging different prices in its domestic and foreign markets. The…
A:
Suppose that we can describe the world using two states and that two assets are available, asset K
an asset L. We assume the asset’s future prices have the following distribution
State | Future Price Asset K | Future Price Asset L |
1 | $55 | $60 |
2 | $45 | $30 |
The current price of asset K is $50, and the current price of asset L is $50.
What is the price implied for an asset providing $100 in state 1 and $50 in state 2?
Step by step
Solved in 3 steps
- Suppose that we can describe the world using two states and that two assets are available, asset K an asset L. We assume the asset’s future prices have the following distribution State Future Price Asset K Future Price Asset L 1 $55 $60 2 $45 $30 The current price of asset K is $50, and the current price of asset L is $50. You plan to buy a home for $100,000 in the future. To guarantee that you will have the money, what would you buy/sell today to accomplish this, and what would it cost today?Suppose that we can describe the world using two states and that two assets are available, asset K an asset L. We assume the asset’s future prices have the following distribution. (See attached table) The current price of asset K is $50, and the current price of asset L is $50. What is the price implied for an asset providing $100 in state 1 and $50 in state 2?Suppose that we can describe the world using two states and that two assets are available, asset K and asset L. We assume the assets' future prices have the following distributions: State Future Prices Asset K Future Prices Asset L Kat state 1 = $25 Lat state 1 = $21 Kat state 2 = $20 Lat state 2 = $27 Let K(1) = $20 denote the time 0 price of asset K and L(1) = s19 the time 0 price of asset L. (a) Assuming no arbitrage opportunities, what are the values of the unit claims, at time 0? (b) What is the risk-free rate of return that must exist in this market?
- 2. Bart lives for two periods: young and old. He can supply labor when he's young, earning $1 per hour. His utility function is given by u (c1,l1, c2) = log c1 – 0l7 + B log c2 where c is consumption at period t, 1 is the labor supplied, ß = , € (0,1) is the time discount factor, and p is time preference. There is an asset market that individuals can save and borrow at interest rate (1+r). (a) Solve for the optimization problem (cj, cž, l4) of Bart. (b) Suppose that the government imposes capital and labor income taxes, TK and TL. Define the life-time budget constraint of Bart with taxes. (c) Solve for the optimization problem with taxes. Does your answer differ from part (a)? Explain.Rodrigo is taking a year between high school and college to work and save up. His utility from consumption each year is U(c) = discounts future utility by B. Rodrigo is going to make $I his year of working, and whatever he doesn't consume from that income will a savings account which will earn return r before he consumes next year. He has to pay for school expenses E in year two, before he consumes (but after return has been realized). 1-o and he go intoQUESTION THREE A UPSA student decides to spend his income on any of these four items - pay tuition fees, pay hostel fees, buy foodstuffs, buy a laptop, and buy a gift for a friend. The market price and the student's expected monetary values or benefits placed on the items are, respectively, presented in the table below. Benefit GH¢ 1,410 1,380 1,480 1,510 1,450 Item Direct cost GH¢ Tuition Hostel 950 950 Food 950 Laptop Gift 950 950 A. Suppose the student has GH¢ 950.00 to spend on one of the five items. From your results in (A), i. Find the opportunity cost of each item. ii. Compute the net benefit of each item using the respective direct cost. iii. . Compute the net benefit of each item using the respective opportunity cost. iv. iv. From your results in (ii), which item should the student pay for? Explain your answer.
- Suppose the cotton (a storable commodity) futures prices are currently Expiry Month Price c/lb December 2021 83 December 2022 96 (a) Is the cotton market in contango or in backwardation? (b) What is the slope of the futures curve for cotton? Draw a future curve graph to support your answer. (c) Are there positive returns to storage between Dec 21 and Dec 22? Draw a graph of supply and demand for storage to support your answer (where t=Dec 21 and t+1=Dec 22).A person's utility function is given by U(x, y, z) = 7xyz, where x, y, z denote then number of units of three commodities X,Y, and Z that the person consumes. The pricesr per unit of X,Y, and Z are 5 euro, 1 euro, and 3 euro respectively. If ther person has a budget of 270 euro, the person's utility is maximised when they consume units of X, units of Y, and units of Z. The person's maximum utility is If the person's budget is increased to 271 euro, then using the method of lagrange multipliers we find that the maximum utility is approximatelySuppose the cotton (a storable commodity) futures prices are currently Expiry Month Price c/lb December 2021 83 December 2022 96 (a) Suppose an unexpected typhoon destroys cotton crops in India. This causes a downward revision in the expected global cotton production in 2022. Assuming all else equal, will demand for storage of cotton in 2021 (St) increase, decrease or stay the same? Draw a graph of the demand for storage to support your answer. (b) Using the same scenario from (a), do you expect the cotton market to still in contango, inverted, or could it be either contango or inverted? Draw a graph of supply and demand for storage to support your answer.
- E) There is a business cycle expansion, so both supply and demand shifts. After the shift, thenew demand curve is given by: D = 4000 + X − 2P, whereas the new supply curve is S =2P+ 200. For which values of X will the interest increase/decrease? Which values of X arein line with empirical data?The following statement is correct based on the graph: Utility "201" "200" "80" "50" $10 $20 $90 $100 Total $ O The graph indicates the diminishing marginal utility of money Expected utility of certain $10> Expected utility of uncertain $10 All of them The graph implies that the utility difference between $10 and $20 is greater than between $90 and $100a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? units of A units of B units of C units of D b. How many dollars will Ricardo choose to save? %24 c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. +24 1 + $[ 1+ $_ + $ %24 00