Explain the concept of the Expected Utility Hypothesis (EUH) and state all relevant assumptions. Use equations and diagrams in your analysis. Critically discuss the strengths ad wonknoco d whether the EU con ha raplagad by alternative thoor
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- Nutritional economics. Suppose we are considering a hungry individual in the Gross-man model deciding what to have for dinner. His options are listed in Table 3.2. Each dish has an effect on the level of the home good Z and health H.a. Suppose the diner’s single-period utility function is as follows: U = 3Z + HIf the diner is trying to maximize his single-period utility, and he can only select one item from Table 3.2, which meal would he choose?b. A miracle pill is discovered that halves the negative health impact of cookies. How does this impact the diner’s choice?c. What effect does the miracle pill have on the diner’s health H? Interpret this result.Does this mean the diner would be better off without the miracle pill?d. If the diner is instead trying to maximize his lifetime utility and not just his single-period utility, how might your answer to Exercise 16(a) change? Is he likely to value Z or H more in the lifetime context than the single-period context? Explain your answer, and…Nutritional economics. Suppose we are considering a hungry individual in the Grossman model deciding what to have for dinner. His options are listed in Table 3.2. Each dish has an effect on the level of the home good Z and health H. a. Suppose the diner’s single-period utility function is as follows:U =3Z +HIf the diner is trying to maximize his single-period utility, and he can only select one item from Table 3.2, which meal would he choose? b. If the diner is instead trying to maximize his lifetime utility and not just his single period utility, how might your answer to Exercise 16(a) change? Is he likely to value Z or H more in the lifetime context than the single-period context? Explain your answer, and be sure to invoke the concept of a capital goodIn the context of econometrics, what does establishing Granger causality between two variables imply? A. There is a long-term equilibrium relationship between the variables. B. Past values of one variable can be used to predict the future values of another variable. C. There is a theoretical economic relationship between the variables. D. The variables are correlated.
- Suppose an individual in the Grossman model is trying to decide what to have for dinner. His options are as below. Each dish has an effect on the level of home good Z and health H. Мeal Home good Z Нeath H Steak and eggs (A) Kale salad with broccoli (B) Entire box of cookies (C) +7 -2 -2 +5 +10 -20 Suppose the dinner's single-period utility function is U=3Z+H • If the individual is trying to maximize his single-period utility, and he can only select one item from the table (assuming he can afford any item in the table). Which meal would he choose? Please type in A, B, or C (do not enter space, punctuation, or any other symbols or words) • A miracle pill is discovered that halves the negative health impact of cookies. How does this impact the individual's choice? What meal would be chosen now? Please type in A, B, or C (do not enter space, punctuation, or any other symbols or words) • If the individual lives in multi-period rather than single-period, would he value Z or H more in…Suppose an individual in the Grossman model is trying to decide what to have for dinner. His options are as below. Each dish has an effect on the level of home good Z and health H. Мeal Home good Z Health H Steak and eggs +7 -2 Kale salad with broccoli -2 +5 Entire box of cookies +10 -20 Suppose the dinner's single-period utility function is U=3Z+H 1. If the individual is trying to maximize his single-period utility, and he can only select one item from the table (assuming he can afford any item in the table). Which meal would he choose? Explain your answer. 2. A miracle pill is discovered that halves the negative health impact of cookies. How does this impact the individual's choice? Explain your answer. 3. If the individual lives in multi-period rather than single-period, would he value Z or H more in multi-period? Explain your answer. Paragraph I U v A •.. > lili BWhat can be done lower errors in econometrics models
- Review the logic of spuriousness. Can you think up an example where an observed relationship between two variables could actually be explained away by a third variable?Which behaviours does expected-utility theory (EUT) have trouble explaining?1. Can you define Probit Model using the Latent Utility Approach, if all the identification restrictions for the model? Justify why we need to impose the identification restrictions.
- With the help of a diagram explain the main principles of the first-order Markov Model.In your answer explain any notation that you use. Explain what is meant by the term‘’first-order”.Why does the ceteris paribus assumption allow economists to focus on the variable they are interested in? Give an example.4. a) Explain what is meant by the four components of the expected utility model. b) Explain what is meant by conformity bias and how it impacts the expected utility model. 5. a) Explain what is meant by market imperfections, giving examples of three different types. b) Explain how these imperfections are relevant in influencing government policy.