Consider an economy with three types of jobs. The table below shows the jobs, the frequency with which vacancies open up on a yearly basis, and the income associated with each job. Searching for a job costs $ C per year and generates at most one job offer. There is a 20 percent chance of not receiving an offer in a year. (Note: The expected search duration for a job with probability p of appearing is 1/ p year.) Job Type Frequency Income A 30 percent $ 60,000 B 20 percent $100,000 C 30 percent $ 80,000 As a function of C, specify the optimal job search strategy if the worker maximizes her expected income net of search costs.
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Consider an economy with three types of jobs. The table below shows the jobs, the frequency with which vacancies open up on a yearly basis, and the income associated with each job. Searching for a
Job Type Frequency Income
A 30 percent $ 60,000
B 20 percent $100,000
C 30 percent $ 80,000
As a function of C, specify the optimal job search strategy if the worker maximizes her expected income net of search costs.
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- Based on Marcus (1990). The Balboa mutual fund has beaten the Standard and Poors 500 during 11 of the last 13 years. People use this as an argument that you can beat the market. Here is another way to look at it that shows that Balboas beating the market 11 out of 13 times is not unusual. Consider 50 mutual funds, each of which has a 50% chance of beating the market during a given year. Use simulation to estimate the probability that over a 13-year period the best of the 50 mutual funds will beat the market for at least 11 out of 13 years. This probability turns out to exceed 40%, which means that the best mutual fund beating the market 11 out of 13 years is not an unusual occurrence after all.Big Hit Video must determine how many copies of a new video to purchase. Assume that the companys goal is to purchase a number of copies that maximizes its expected profit from the video during the next year. Describe how you would use simulation to shed light on this problem. Assume that each time a video is rented, it is rented for one day.The game of Chuck-a-Luck is played as follows: You pick a number between 1 and 6 and toss three dice. If your number does not appear, you lose 1. If your number appears x times, you win x. On the average, use simulation to find the average amount of money you will win or lose on each play of the game.
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