Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 15, Problem 7P
(a)
To determine
Independence among the events, when card is drawn with replacement.
(b)
To determine
Independence among the events, when card is drawn without replacement.
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6.
Jerry plans to buy a new Bluetooth headset. He knows that the same product is offered in different shops with prices of $44, $49, and $60, and with odds of one-third of finding each price. He just stopped at a shop and knows that their price is $49. If the search cost is $1 per additional search, what should Jerry do?
4. Kate has von Neumann-Morgenstern utility function U(x1,x2) = m7. She currently has
$2025.
a. Would she be willing to undertake a gamble that involves a gain $2875 with probability +
and a loss of $1125 with probability ? Show your work and explain your answer.
b. Would she be willing to undertake a gamble that involves a gain $2599 with probability
and a loss of $800 with probability ? Show your work and explain your answer.
As an investment advisor, you tell a client that an investment in a mutual fund has (over the next year) a higher expected return than an investment in the money market. The client then asks the following questions: a. Does that imply that the mutual fund will certainly yield a higher return than the money market? b. Does it follow that I should invest in the mutual fund rather than in the money market? How would you reply?
Chapter 15 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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