Describe how the risk premium for a person with a convex utility function is determined
What will be an ideal response?
A person with a convex utility function is risk preferring. This person will not pay a premium to avoid risk. The risk premium is zero.
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At the beginning of the year, Becky's wealth was $30,000. During the year, she earned $50,000 of income, paid $6,000 in taxes and consumed $43,000 of goods and services. What is Becky's wealth at the end of the year?
What will be an ideal response?
Assume that an inferior good is produced in a perfectly competitive, increasing-cost industry with external diseconomies. The market is initially in long-run equilibrium. After all long-run adjustments are made, which of the following would occur in this market as a result of an increase in consumers' incomes?
a. The market price would remain unchanged; the market quantity would rise. b. The market price would rise; the market quantity would fall. c. The market price would remain unchanged; the market quantity would fall. d. Both the market price and the market quantity would fall. e. Both the market price and the market quantity would rise.
The lower left-hand corner of a graph where the two axes meet is called the graph’s origin.
Answer the following statement true (T) or false (F)
List and describe the three effects that help to explain why the aggregate demand (AD) curve slopes downward