A Spanish can either produce 3 liters of win or 1 kilos of cheese. A Portuguese worker can either pr… Show more A Spanish can either produce 3 liters of win or 1 kilos of cheese. A Portuguese worker can either produce 4 litres of win or 12 kilos of cheese 1) Which countries have absolute advantages in which goods? Explain 2) Which countries have comparative advantages in which goods? Explain 3) Can the two countries gain from trade? If so then explain at what set of relative prices both countries gain from trade 4) Use an example to show how both countries can increase their consumption of both goods by trading with one another • Show less

4. Find the mixed strategy NE of the game. 1/2 L C R U 5,5 8,4 8,6 M 4,8

from wealth W. Jane has $100, but there is a 25% chance she will require s… Show more Jane obtains utility W 1/2 from wealth W. Jane has $100, but there is a 25% chance she will require surgery which costs $64. (a) Sketch this utility function, indicating the values of Jane’s wealth if she does and if she does not need surgery. (b) calculate the expected value of Jane’s wealth (c) calculate Jane’s expected utility (d) what is Jane’s certainty equivalent? (e) an insurance company incurs a cost of $4 per additional contract it sells. Can the company profitably insure Jane? Explain • Show less

Sierra Nevada Brewing Company experienced the following monthly sales (in thousands of barrels) duri… Show more Sierra Nevada Brewing Company experienced the following monthly sales (in thousands of barrels) during 2014 January February March April May June 100 92 112 108 116 116 A) Develop 2-month moving average forecasts for March through July. B) Develop 4-month moving average forecasts for May through July C) Develop forecasts for February thru July using the exponential smoothing method (with w= .5) Begin by assuming . • Show less

a) What is the marginal revenue… Show more Use the information in each scenario alone to answer each question. a) What is the marginal revenue of a firm that sells a product at the price of $15 and the price elasticity of demand for the product is -2? b) What is the price elasticity of demand of a firm that sells a product for $20 and marginal revenue is $12? c) Use the following demand function to determine the revenue maximizing price and quantity, Q=2500-5.5P. • Show less

What is mercantilism? Use the specie-flow mechanism to show how mercantilism fails.

eddies precision shop is insured for $700,000. The present yearly insurance premium is $1.00 per $1… Show more eddies precision shop is insured for $700,000. The present yearly insurance premium is $1.00 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $20,000. Annual maintenance costs for the sprinkler system are $400. If the sprinkler system is installed, the system must be included in shops value for insurance purposes, but the insurance premium will reduce to $0.40 per $100 of coverage. Eddie uses a MARR of 15 percent/year. What’s the present worth of this investment? Is the sprinkler system economically justified? • Show less

Assume two economies that have identical production possibilities frontiers. Show how they can still… Show more Assume two economies that have identical production possibilities frontiers. Show how they can still gain from trade if their populations have different tastes. (Graph 2 different sets of indifferent curves to represent the different tastes, then determine the relative price ratios in each country in the absence of trade. Use combination of words and diagrams.) • Show less

7. The players simultane… Show more Player I holds a black Ace and a red 8. Player II holds a red 2 and a black 7. The players simultaneously choose a card to play. If the chosen cards are of the same color, Player I wins. Player II wins if the cards are of dierent colors. The amount won is a number of dollars equal to the number on the winner’s card (Ace counts as 1.) Thus, if Player I plays black Ace while Player II plays red 2, Player I gets a payo of -2 (loses two dollars), and Player II gets a payo of 2 (wins two dollars); and likewise for the other strategy proles. Set up the payo matrix, nd the Nash equilibrium, and calculate each player’s expected payo in the equilibrium. • Show less

Prove the Heckscher-Ohlin theorem. Assume two different sets of factors abundancies for two countrie… Show more Prove the Heckscher-Ohlin theorem. Assume two different sets of factors abundancies for two countries and derive the resulting free trade triangle. Use the combination of words and graphs for the answer. • Show less