Adriana wants to try working as an independent contractor this summer. She has a 50 percent chance that she will make $9,000 and 50 percent chance that she will make nothing. Her utility of wealth curve is shown in the figure above
What's Adriana's cost of risk? A) $2,500
B) $2,000
C) zero
D) $40
A
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Which of the following most accurately describes the "Fisher effect?"
a. Interest rates increase after inflation and decrease after deflation, but with a long lag. b. Interest rates are independent of inflation and deflation. c. Interest rates increase after inflation, but are not affected by deflation. d. Increasing interest rates precede inflation and decreasing interest rates precede deflation.
Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?
a. This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. b. The price paid by buyers is $2.00 per bottle more than it was before the tax. c. Sixty percent of the burden of the tax falls on sellers. d. All of the above are correct.
Consider the following innovation game: Firm A must decide whether or not to introduce a new product. Firm B must decide whether or not to clone firm A's product. If firm A introduces and B clones, then firm A earns $1 and B earns $10. If A introduces and B does not clone, then A earns $10 and B earns $2. If firm A does not introduce, both firms earn profits of 0. How many Nash equilibria are there for this game?
A. 2 B. 0, but there are secure strategies. C. 1 D. 0
How will an increase in income affect the budget line for two goods, all other things equal? How does an increase in the price of one good affect the budget line for two goods, all other things equal?
Please provide the best answer for the statement.