Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it in inventory for possible future product and estimates that the reservation value is $250,000. Your dealings on the second-hand market lead you to believe that there is a 0.4 chance a random buyer will pay $300,000, a 0.25 chance the buyer will pay $350,000, a 0.1 chance the buyer will pay 400,000, and a 0.25 chance it will not sell. If you must commit to a posted price, what price maximizes profits?

In the Hawaiian Beach Boy surf board vendor scenario, what if the fine was increased to $190 but the probability of a fine decreased to one in 20 days, 5%?  What would be the expected value – Exp(RS) --  of continuing to rent surfboards?  Assume the other numbers stay the same.  He makes $300/day and to rent boards from friends costs him $100 a day.  So, he makes $200 a day.  Write out the expected value formula, plug in the numbers, and show the math.  Hint: the Exp(RS) should be higher than the previously calculated $160.

You are an analyst for De Boers, the monopoly producer of diamonds. You are given the following market information: P = -4Qp + 76 P = 8Qs + 10 %3D TC = 40 + 15Q² MC = 30Q %3D %3D

Bevan’s Cycles, a chain of bike shops that were early adopters of an online business model, are trying to improve customer satisfaction from bike purchases. To do so, they are considering setting up a ‘fitting service’ to help customers get the perfect fit on their bikes, thus reducing bicycles returned. The way the service would operate is that customers will book a session with a ‘fitting expert’. This will involve the customer coming into the shop where they will be filmed riding a stationary bike (like you get at the gym) and then the film will be analysed by a computer system to give them the perfect fitting bike. At each bike shop, this will entail a fixed cost for installing the computer system for analysing each customer and a marginal cost for training each member of staff. The head office sets a budget of £10,000 if 2 members of staff are trained, and for the bigger stores £12,000 if 3 members of staff are trained. The total expense for this must be incurred in a single year.…

Most people do not steal because:         the marginal utilities of stolen goods diminish as more of them are                   obtained.        the marginal utilities of stolen goods are negative.        their marginal costs, including guilt costs, are too high.        stolen goods can be sold only at deep discounts.

 Time remaining: 01 :53 :32 Economics A dealer decides to sell an antique automobile by means of an English auction with a reservation price of $900. There are two bidders. The dealer believes that there are only three possible values, $7,200, $3,600, and $900, that each bidder’s willingness to pay might take. Each bidder has a probability of 1/3 of having each of these willingnesses to pay, and the probabilities for each of the two bidders are independent of the other’s valuation. Assuming that the two bidders bid rationally and do not collude, the dealer’s expected revenue from selling the car is approximately Group of answer choices $3,600. $2,500. $3,900. $5,400. $7,200.

Prospect Y = ($6, 0.25 ; $15, 0.75) If Will's utility of wealth function is given by u(x)=x0.25, what is the value of CE(Y) for Will? (In other words, what is Will's certainty equivalent for prospect Y?) (The certainty equivalent represents the maximum amount a person would be willing to pay to acquire a risky prospect, and equivalently, the lowest price for which they would be willing to sell a risky prospect if they already owned it) (Note: The answer may not be a whole number; please round to the nearest hundredth) (Note: The numbers may change between questions, so read carefully)

Priyanka has an income of £90,000 and is a von Neumann-Morgenstern expected utility maximiser with von Neumann-Morgenstern utility index . There is a 1 % probability that there is flooding damage at her house. The repair of the damage would cost £80,000 which would reduce the income to £10,000. a) Would Priyanka be willing to spend £500 to purchase an insurance policy that would fully insure her against this loss? Explain. b) What would be the highest price (premium) that she would be willing to pay for an insurance policy that fully insures her against the flooding damage?

Global Gas International offers to contract the Halidurton Heavy Construction Corporation to build an oil pipeline from Canada to New Orleans that will provide Halidurton $500 million in income. The probability that the oil pipeline will leak, causing environmental damage is 0. If so, the legal liability will be $2,500 million. If Halidurton is risk neutral and liable for the damages from a leak, what is the 0 such that it is indifferent between accepting and rejecting the contract? Halidurton is indifferent between accepting and rejecting the contract if 0 equals rounded to the nearest whole number.) percent. (Enter your response