EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 15, Problem 15.3P
a
To determine
Effort chosen by C.
c)
To determine
Minimum bonus to be paid and fixed salary in addition for acceptance of contract.
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Students have asked these similar questions
9. There are four agents who are trying to decide whether they will buy a publicly shared
TV, of which the total cost is $200. The valuations of the TV are $30 for agent 1, S35
for agent 2, $70 for agent 3, and $70 for agent 4. Let c; be how much agent i will pay
if the TV is purchased. Suppose c = 20, c2 = C3 = C4 = 60. According to Groves
and Clarke mechanism, which one could not be the pivotal agent?
A. agent 1
B. agent 2
C. agent 3
D. agent 4
Suppose that 20 risk neutral competitors participate in a rent seeking game with a fixed prize
of $500. Each player may invest as much money as he wishes in the political contest. The
probability of winning is directly proportional to the candidate's share of the total rent-seeking
investment.
1. What is the expected net benefit of a player if all other players invest $20 each? Write
the net benefit as a function of the player's investment.
2. Solve the maximization problem to arrive at the profit-maximizing investment. Round to
the nearest cent.
6. An analyst is assessing a DM's utility function for profit Y, in dollars, ranging from
-400,000 to 2,000,000, and wishes to use a function:
U(Y) :
=
Y+400,000 B
2,400,000
9
-400,000 ≤ y ≤ 2,000,000
She determined that the DM is indifferent between Alternative A and Alternative B:
Alternative A: Probability 0.5 of making profit $2,000,000
Probability 0.5 of making profit -$400,000
Alternative B: Probability 1.0 of making profit of $800,000
(a) What would you use for the DM's utility function? Show your work.
6
(b) Why could you use Expected Value when analyzing problems involving profit
for this DM?
Chapter 15 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 15.2 - Prob. 1TTACh. 15.2 - Prob. 2TTACh. 15.2 - Prob. 1MQCh. 15.2 - Prob. 1.1MQCh. 15.2 - Prob. 2.1MQCh. 15.2 - Prob. 1.1TTACh. 15.2 - Prob. 2.1TTACh. 15.2 - Prob. 1.2TTACh. 15.2 - Prob. 2.2TTACh. 15.3 - Prob. 1MQ
Ch. 15.3 - Prob. 2MQCh. 15.4 - Prob. 1MQCh. 15.4 - Prob. 1.1MQCh. 15.4 - Prob. 2.1MQCh. 15.5 - Prob. 1TTACh. 15.5 - Prob. 2TTACh. 15.5 - Prob. 1MQCh. 15.5 - Prob. 2MQCh. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQCh. 15 - Prob. 15.1PCh. 15 - Prob. 15.2PCh. 15 - Prob. 15.3PCh. 15 - Prob. 15.4PCh. 15 - Prob. 15.5PCh. 15 - Prob. 15.6PCh. 15 - Prob. 15.7PCh. 15 - Prob. 15.8PCh. 15 - Prob. 15.9PCh. 15 - Prob. 15.10P
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