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In footnote 7 we showed that for a utility function for two goods to have a strictly diminishing MRS (i.e., to be strictly quasi-concave), the following condition must hold: Use this condition to check the convexity of the indifference curves for each of the utility functions given below. Describe the precise relationship between diminishing marginal […]

The definition of the variance of a random variable can be used to show a number of additional results. a. Show that Var(x) =E(x2) – [E(x)]2.b. Use Markov’s inequality to show that if x can take on only non-negative values, This result shows that there are limits on how often a random variable can be

If a new breakthrough in manufacturing technology reduces the cost of producing Blu-ray players by half, what will happen to the each of the following? a. Supply of Blue-ray players.b. Demand for Blu-ray players.c. Equilibrium price and quantity of Blu-ray players.d. Demand for Blu-rays.

The ability of an economy to produce greater levels of output is called a. positive economics.b. negative economics.c. economic growth.d. the law of specialization.

Can Gasoline Become an Exception to the Law of Demand? Can the Law of Supply Be Repealed for the Oil Market? Can the Price System Eliminate Scarcity?

Because we use the envelope theorem in constrained optimisation problems often in the text, proving this theorem in a simple case may help develop some intuition. Thus, sup-pose we wish to maximise a function of two variables and that the value of this function also depends on a parameter, a: f (x1, x2, a). This

Suppose that a consumer’s utility function for goods x, y and z is expressed according to the Cobb–Douglas utility function Prices are given by Consumer income is given by I= 8. a. Determine the utility maximising quantity of good z consumed.b. Explain why this quantity of good z is optimal?c. Determine the minimum income required

A health insurance company considers the risk to a Sherpa who has a current wealth of 20 000 renminbi (RMB), working in the Himalayas, incurring an injury in the performance of their duties which that will cost 10 000 RMB in medical care is 50 per cent. a. Calculate the cost of actuarially fair insurance

GDP is a less-than-perfect measure of the nation’s economic pulse because it a. excludes nonmarket transactions.b. does not measure the quality of goods and services.c. does not report illegal transactions.d. All of the answers above are correct.

Personal income equals disposable income plus a. personal savings.b. transfer payments.c. dividend payments.d. personal taxes.