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Author Question: Refer to the figure above. What is the social surplus if the market is in equilibrium? A) 50 B) ... (Read 21 times)

charchew

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on: Jun 29, 2018
Refer to the figure above. What is the social surplus if the market is in equilibrium?
 
  A) 50
  B) 75
  C) 100
  D) 150

Question 2

An individual receives 100 if the outcome of a coin toss is heads. If the outcome of the coin toss is tails, he loses 50. If the individual weights future loses by a special factor of 2, what is the psychological value of this coin toss?
 
  What will be an ideal response?


jackie

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

Probability of getting heads = 1/2.
Probability of getting tails = 1/2.
Psychological value of this coin toss = 1/2  100 + 1/2  -(50 )  2 = 50 - 50 = 0.


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