Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 36 and WR = 25 and the probability of drought is 0.75. Brandon's risk premium is:
A. 66.31 units of water.
B. 0.19 units of water.
C. 33.16 units of water.
D. 3.20 units of water.
B. 0.19 units of water.
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Suppose Dan is willing to pay a maximum of $3,000 for a piano, but finds one he can buy for $2,500. Dan's consumer surplus from this piano is
A) $5,500. B) $3,000. C) $2,500. D) $500. E) zero because he buys the piano.
Tariffs and import quotas both result in
A) lower levels of domestic production. B) the domestic government gaining revenue. C) lower levels of imports. D) higher levels of domestic consumption.
A reserve ratio of 10% means that the deposit expansion multiplier is _________.
Fill in the blank(s) with the appropriate word(s).
The discount rate is typically:
A. higher than federal funds rate. B. lower than federal funds rate. C. about the same as federal funds rate. D. determined by the government, and does not correlate with other interest rates.