Suppose Craig gets 30 dollars tomorrow if he is employed and 0 dollars if he is laid off. Craig is risk averse and has utility function U(x) = √x. Craig's exploitative friend Jenny is risk neutral and offers Craig insurance. Jenny makes the following take it or leave it offer to Craig: she asks him to pay a premium P in the case he is employed, and in exchange offers benefit B if Craig gets laid off. The commonly known probability of Craig being laid off is p ∈ (0,1). (a) What premium and benefit should Jenny offer Craig to maximize her own profit? 15 points (b) Evaluate the truth of the following statement and provide intuition: The higher the risk of being laid off, the more Craig values insurance and the higher profit potential for Jenny.
Answers
Let us find the premium and benefit that Jenny should offer Craig to maximize her own profit. Given that Craig gets $30 tomorrow if he is employed and 0 dollars if he is laid off.
Let the probability of him being laid off be p. The expected utility of Craig's wealth is given by: E(U) = (1-p) √(30 - P) + p √BWe know that Jenny is risk-neutral so the benefit that she offers should have an expected value equal to the premium paid by Craig. So, B = (1-p)(30 - P)
Therefore, the expected utility can be rewritten as E(U) = (1-p) √(30 - P) + p √(1-p)(30 - P)
Now, the maximum profit for Jenny is the amount of money that she expects to receive from Craig minus the benefit offered to Craig. So, Profit = p(BP) = p[(1-p)(30 - P) - P] = p(30 - 2P + pP) = 30p - 2pP - p²
Now, substituting the value of p, we get P = 15 and B = 225. So, Jenny should offer Craig a premium of $15 and a benefit of $225 to maximize her own profit.
To know more about premium please refer:
https://brainly.com/question/16845751
#SPJ11
Related Questions
In the Month of March, Baldwin received orders of 156 units at a price of $15.00 for their product Bolt, and in April receives an order for 39 units of their product Bolt at $15.00. Baldwin uses the accrual method of accounting and offers 30-day credit terms. Baldwin delivers 0 units in March, 156 units in April and 39 units in May. They received payment for 156 units in April and payment for 39 units in May.
Required:
How much revenue is recognized on the March income statement from this order?
Answers
nal Accounts Section Sales Cost of sales Rent income Interest on fixed deposit Directors' fees Salaries and wages Bad debts Audit fees Bank (ts) Advertising Consumable stores A. Sundry expenses Ordinary share dividends ADJUSTMENTS AND ADDITIONAL INFORMATION: 750 000 15 450 000 1 230 000 1315 150 24 000 147 600 975 000 80 800 560 000 368 20 Selling prices are determined by using a mark-up of 40% on cost Note: Trade discounts of R130 000 were allowed to special customers the financial year. in me paffo Sales. How are sales calculated
Answers
The overall sales for the fiscal year are 21,500,000, according to the information provided.
What is the fiscal year?A fiscal year is a 12-month period used by businesses and governments for financial reporting and budgeting purposes. It does not necessarily coincide with the calendar year and can start on any date. The fiscal year is used to report financial results and tax obligations to the government, and it is important to follow it accurately to ensure that all financial reporting is consistent and accurate.
Based on the information provided, the total sales can be calculated as follows:
The total cost of sales = 15,450,000
Markup on cost = 40%
Total markup = 40% of 15,450,000
= 6,180,000
The total cost of goods sold (COGS) = Total cost of sales + Total markup
= 15,450,000 + 6,180,000
= 21,630,000
To calculate the total sales, we need to subtract any discounts given to customers from the COGS:
Total sales = Total cost of goods sold - Trade discounts
= 21,630,000 - 130,000
= 21,500,000
To learn more about COGS, click
https://brainly.com/question/13499038
#SPJ1
A decrease in the price of eggs will: Group of answer choices increase the quantity supplied of eggs. increase the demand for eggs. decrease the supply of eggs. increase the quantity demanded for eggs.
Answers
Answer:
increase the quantity demanded for eggs.
Explanation:
According to the law of supply, the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied. there is a positive relationship between price and quantity supplied.
According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded. there is an inverse relationship between price and quantity demanded
So, a decrease in the price of eggs will decrease the quantity supplied and increase the quantity of eggs demanded.
Which is the most common type of precipitation?
Answers
Answer: Rain.
Explanation:
Bill Nye.
Answer: Rain
Explanation:
conditions that could negatively affect a company's competitive capability are called
Answers
Conditions that could negatively affect a company's competitive capability are called competitive disabilities.
These can include factors such as a lack of resources or technology, poor marketing strategies, ineffective leadership, high costs of production, and strong competition from other companies. It is important for businesses to identify their competitive disadvantages and work to overcome them in order to stay competitive in their industry.
These conditions are called "external threats."
External threats can arise from various factors, such as economic downturns, changes in customer preferences, new competitors entering the market, and unfavorable government regulations. By identifying and addressing these external threats, companies can better maintain and improve their competitive capability in the market.
Learn more about external threats here: https://brainly.com/question/31723633
#SPJ11
Brad Johnson owned a parcel of investment real estate that had an adjusted basis of $25,000 and a fair market value of $40,000. During 2015, Johnson exchanged his investment real estate for the items of property listed below.
Land to be held for investment (fair market value) $35,000
A small sailboat to be held for personal use (fair market value) 3,000
Cash 2,000
What is Johnson's recognized gain and basis in his new investment real estate?
Please show all work and explain how you got the answer.
Answers
In the exchange, Brad Johnson recognizes no gain. His basis in the new investment real estate remains the same as the adjusted basis of his original investment real estate, which is $25,000.
To calculate Brad Johnson's recognized gain and basis in his new investment real estate, we need to determine the fair market value of the property he received in the exchange and compare it to the adjusted basis of his original investment real estate.
The fair market value of the land received is $35,000. Since this property is to be held for investment, it qualifies for a like-kind exchange treatment, which means no gain or loss is recognized. Therefore, Johnson's recognized gain for the land is $0.Next, we consider the fair market value of the small sailboat, which is $3,000. Since this property is for personal use and not held for investment, it does not qualify for like-kind exchange treatment. Therefore, Johnson must recognize the gain on the sailboat, which is the fair market value ($3,000) minus the adjusted basis ($25,000). The recognized gain on the sailboat is $0.
Finally, we consider the cash received, which is $2,000. Cash is considered boot in a like-kind exchange, and boot is always recognized. Therefore, Johnson must recognize the gain on the cash, which is the cash received ($2,000) minus the adjusted basis ($25,000). The recognized gain on the cash is $0.Since there is no recognized gain, Johnson's basis in his new investment real estate will be equal to the adjusted basis of his original investment real estate, which is $25,000.
To learn more about investment click here
brainly.com/question/21617407
#SPJ11
Anyone know how to work powerpoint?
Answers
the metaphor the textbook choose to describe the relationship between organizational culture and project management is that of a riverboat trip. culture
Answers
Culture is the river and the project is the boat in the textbook describing the organizational culture and project management.
What is organizational culture and how does it affect project management?The attitudes, values, beliefs, and behaviors of an organization's workplaces where the culture is not supportive of it, project personnel, as well as its underlying presumptions, make up its culture. In management can occasionally be seen as an additional burden and disturbance to routine work.
In the absence of an effective project management office (PMO) and consistent organizational culture and practices across projects, project operations will differ from one project to the next as well as from one department to the next. The project culture of an organization largely impacts whether the projects it works on are successful or unsuccessful.
To know more bout organizational culture visit:- https://brainly.com/question/28503044
#SPJ4
A maker of computer games expects to sell 400,000 games at a price of $49 per game. These units cost $15 to produce. Selling, general, and administrative expenses are $1.3 million and depreciation is $280,000. What is the EBIT break-even point for the number of games sold in this case? A. $38,235 B. $46,471 C. $32,245 D. $86,667
Answers
To calculate the EBIT (Earnings Before Interest and Taxes) break-even point, we need to find the number of games that need to be sold in order to cover all expenses and have an EBIT of zero.
Given:
Selling price per game = $49
Cost to produce per game = $15
Selling, general, and administrative expenses = $1,300,000
Depreciation = $280,000
Let's calculate the total expenses:
Total expenses = Selling, general, and administrative expenses + Depreciation + (Cost to produce per game × Number of games)
Total expenses = $1,300,000 + $280,000 + ($15 × Number of games)
At the EBIT break-even point, the total expenses will be equal to the revenue:
Total expenses = Revenue
$1,300,000 + $280,000 + ($15 × Number of games) = ($49 × Number of games)
Now, let's solve for the Number of games:
$1,580,000 + ($15 × Number of games) = ($49 × Number of games)
Subtracting ($15 × Number of games) from both sides:
$1,580,000 = ($49 - $15) × Number of games
$1,580,000 = $34 × Number of games
Dividing both sides by $34:
Number of games = $1,580,000 / $34
Number of games ≈ 46,471.43
Therefore, the EBIT break-even point for the number of games sold is approximately 46,471 games.
Among the provided answer options, the closest one is B. $46,471.
To know more about EBIT visit
https://brainly.com/question/33688727
#SPJ11
"
Subsidies are a price-based policy tool intended to the externality generated through the adoption of technologies that reduce pollution, generating goods. Subsidies work because they the price of the___________
"
Answers
The correct answer is Subsidies work by lowering the price of subsidized goods or services.
Subsidies work because they lower the price of the subsidized goods or services. By providing financial support to producers or consumers, subsidies effectively reduce the cost of adopting technologies or practices that mitigate pollution or generate public goods. This price reduction encourages increased adoption and consumption of the subsidized goods or services, making them more attractive and accessible to businesses and consumers.
Subsidies can create market incentives that drive the adoption of environmentally friendly technologies, leading to reduced pollution levels and improved sustainability. By reducing the price barrier, subsidies aim to promote the desired behaviors or outcomes and address market failures associated with externalities.
Learn more about subsidies here:
https://brainly.com/question/31941598
#SPJ11
What are Logistics careers?
Answers
What percentage of government land assets, including lakes, rivers, and streams, are set aside as public lands designated for recreational use or managed to protect natural resources
Answers
Your broker charges a commission of 5.1% of the cost of the stock you so if you sell a batch of stock worth 2,617,75 how much commission will you owe the broker
Answers
Answer:
a
Explanation:
$133.51 commission will you owe the broker, if you sell a batch of stock worth 2,617,75.
Thus, the correct option is A.
Who is a broker?
A broker is a free-standing individual or business that conducts financial transactions on behalf of others. Stocks, foreign exchange, real estate, and insurance are just a few of the asset groups that are impacted by these transactions.
The trading broker only acts on behalf of others, whereas the trader only deals with his or her own assets ("on his or her own account"). The broker acts on your behalf by using your assets, not his.
A broker deals in currencies, commodities, and financial instruments. The broker always acts on behalf of others, which is how they differ from traders. Worldwide, there is a huge variety of brokers, each with a different style, level of quality, and regulatory setup.
The spread, fee, or financing costs associated with a trading position generate revenue. The other CFD broker, in contrast, solely benefits financially from the trader's loss. Any gain achieved by the trader is a loss for the broker, which is why positions are manipulated or withdrawals are not executed.
Learn more about broker, here
https://brainly.com/question/14094023
#SPJ6
does doja cat deserve her fame? what do you think?
Answers
controlling labor costs is not possible without also controlling blank . multiple choice question. retirement age executive compensation benefits costs the number of new hires
Answers
Controlling labor costs is a critical aspect of managing a business's bottom line. One way to do this is by effectively managing employee benefits costs, including health insurance, paid time off, and the retirement benefits.
These costs can be significant, and reducing them can have a substantial impact on a company's profitability. However, controlling labor costs involves more than just managing employee benefits. Other strategies may include streamlining operations to increase efficiency, reducing unnecessary overtime, and cross-training employees to perform multiple functions.
Additionally, controlling labor costs may also involve managing executive compensation, ensuring that salaries and bonuses are aligned with the company's overall financial goals. Ultimately, effective labor cost control requires a holistic approach that considers all aspects of a company's operations.
Learn more about Cost here:- brainly.com/question/28147009
#SPJ11
Choose one of the scenarios below and write a three-paragraph essay describing
its effect on prices for food, housing, and oil. Remember that the future is always
uncertain, so there's no right answer. Make your best guess as to what might
happen in each case based on the economic concepts you've learned so far. Pay
particular attention to how consumer demand would change and how the event
would affect production costs and the business cycle. (30 points)
a. The president signs a free-trade agreement between the United States and
Brazil.
b. The Federal Reserve chairman says that the central bank will raise interest
rates.
c. The Environmental Protection Agency relaxes environmental rules on timber
production.
Answers
Since there is no clear-cut right or wrong response, it is best to choose the opposing side. In my opinion, investors have a net positive impact on the businesses they invest in. Investments inevitably lead to expansion and growth, which is always at least one of the key objectives of every successful business.
What is a free-trade agreement?According to international law, a free-trade agreement or treaty establishes a free-trade zone between collaborating governments. Bilateral and multilateral trade agreements are the two different sorts.FTAs are agreements between two or more countries that have as their goals the reduction or elimination of particular trade and investment barriers and the promotion of closer economic links between the parties. Today's famous example of free trade is the European Union. The member nations effectively operate as a single, borderless entity for trade purposes, and the majority of these nations' adoption of the euro makes things even simpler. Free trade agreements don't just reduce and eliminate tariffs, they also help address behind-the-border barriers that would otherwise impede the flow of goods and services; encourage investment; and improve the rules affecting such issues as intellectual property, e-commerce and government procurement.To know more about free-trade agreement refer to:
https://brainly.com/question/2201430
#SPJ13
You are managing a project to build an urgent care clinic. Your company is expanding and has constructed 25 clinics so far. Which estimating technique makes the most sense to use in this situation?
Answers
Answer:
Delphi technique
Explanation:
The Delphi model is a technique of group communication in which a panel of experts reach consensus on a set of questions and discussions. This is used to predict or to forecast. First, choose an effective facilitator and experts with relevant expertise, and ensure that the issue is well established after that they reach with a decision
Therefore in the given case, the delphi technique is used
If a stadium sells 40,000 seats sold at $20, $22.50, and $25 and $28 equally distributed in four sections, how much can be made if the stadium sells out?
Answers
section B = 14,900 seats
section C = 7,600 seats
Amount of stadium sells out is $955,000
Given:
Number of stadium sells = 40,000
Four section cost = $20 , $22.5 , $25 , $28
Find:
Amount of stadium sells out
Computation:
Average price = [20 + 22.5 + 25 + 28] / 4
Average price = [20 + 22.5 + 25 + 28] / 4
Average price = 95.5 / 4
Average price = $23.875
Amount of stadium sells out = Number of stadium sells × Average price
Amount of stadium sells out = 40,000 × $23.875
Amount of stadium sells out = $955,000
Learn more:
https://brainly.com/question/14094934?referrer=searchResults
Which term defines all of the other options that are given up when a business makes one choice over another?
trade-offs
O limited resources
O diminishing returns
opportunity costs
Answers
Answer:
Trade-offs would be the correct term
In the early 1900s, John D. Rockefeller bought out other companies or drove
them out of business. What was Rockefeller's motive?
O A. To avoid paying taxes
O B. To bypass consumers
C. To control the government
D. To decrease competition
Answers
Bought goods
for
cash $100
to double
entry system.
Answers
Answer:Purchase account Dr.$100
cash account Cr.$100
Explanation:
Which is a type of checking and savings account that is issued by financial institutions and investment firms that has a higher yield than simple savings accounts, but with some restrictions based on minimum amounts withdrawn
Answers
Answer:
Money Market Account
Explanation:
there are these Karens at my house putting their trash in front of MY HOUSE and what can i do?
Answers
Answer:
call the cops
Explanation:
First have a conversation with them and if they do not understand simply be a Karen yourself and call the cops. I am pretty sure they will know what to do because that is YOUR property (or at least your own space that you pay for).
in 2018, online retail sales reached over $517, or approximately______percent of all retail sales.
Answers
In 2018, online retail sales reached over $517 billion, or approximately 14.3 percent of all retail sales.
What exactly are retail sales?Retail sales refer to the goods or services sold by businesses directly to consumers for personal or household use. Retail sales typically occur in physical stores, but they can also happen through e-commerce websites or other digital channels.
Retail sales can include a wide variety of products, including clothing, electronics, groceries, furniture, and more. They can also include services such as haircuts, car repairs, or other types of personal services.Retail sales are an important indicator of economic activity, as they reflect consumer demand and spending patterns. Many companies rely on strong retail sales to generate revenue and profit, and fluctuations in retail sales can have a significant impact on overall economic growth.To learn more about e-commerce, click
https://brainly.com/question/29115983
#SPJ1
Applications of can help marketers determine which television shows current and potential customers watch,
allowing marketers to determine the value of advertising on a particular show.
O A. Big Data
B. customer relationship management (CRM)
OC. one-to-one marketing
OD. search engine optimization (SEO)
E. data mining
Answers
an offer that can only be accepted by an offere's performance creates a(n) __________________________ contract
Answers
Answer: unilateral contract
Explanation:
An unilateral contract is a contact that is formed when an individual offers to do a particular thing in return for either money or something else that was agreed on.
Once such individual does that thing, he or she has to be given what was agreed on in the contract. A typical example is the contact regarding an insurance policy.
Therefore, an offer that can only be accepted by an offere's performance will create a unilateral contact.
PLEASE HELP ME !!!! What are 5 codes you can use when you are in danger of an armed or violent person when calling 911?
Answers
what are some strategies that you can use to prepare to file taxes each year? What would be he benefits of these strategies?
Answers
Strategies which can be used to prepare for filing taxes each year are by keeping a proper record of expenses and receipts by filling them out, sorting out each piece of documentation that will be required at the time of filing tax, and one can create folders and sub-folders also.
The benefits of these strategies are:
It will help in avoiding added penalties or interests.
It will keep track of future refunds.
A portion or the entire refund can be used to pay back any owed taxes, among other things.
What is tax filing?"Tax filing" or "tax return" means filing a document with a tax authority. In that document, reports about income, expenses, and information about other financial activities are filled in.
Filing a tax return is entirely dependent on income. There are certain guidelines within which one can file a tax.
Therefore, with the usage of strategies, one can prepare tax file each year.
Learn more about strategies that can use to prepare to file taxes each year from here:
https://brainly.com/question/13405581
#SPJ1
11. Vicki believes that community service is a valuable way to spend her time and energy. What is this an example of?
O A. Liability
O B. Net worth
O c. Priority
O D. Value
Answers
Given below are lease terms at the local dealership. What is the total cash
due at signing?
Terms:
• Length of lease = 24 months
• MSRP of the car = $17,500
• Purchase value of the car after lease = $9900
• Down payment = $2400
• Monthly payment = $425
• Security deposit = $375
• Acquisition fee = $500
Answers
Answer:
$3700
Explanation:
The items that have to be paid for at the signing include
1. The deposit: $,2,400.00
2. Monthly payments : $425.00
3. Security deposit: $375.00
4. Acquisition fee: $ 500.00
Total due $3,700.00
Answer:
$3700
Explanation:
Took the test, this is the correct answer.