This topic contains a solution. Click here to go to the answer

Author Question: Income taxes cause _____. a. individuals to substitute towards leisure b. individuals to ... (Read 111 times)

jjjetplane

  • Hero Member
  • *****
  • Posts: 556
Income taxes cause _____.
 
  a. individuals to substitute towards leisure
  b. individuals to substitute towards jobs with more in-kind benefits
  c. individuals to work in underground markets
   d. all of the above

Question 2

Sarah buys little stuffed animals for 5 each. They come in different varieties. If the producer stops making (retires) a certain variety, a stuffed animal of that variety will be worth 100; otherwise it is worth 0.
 
  There is 25 chance that any variety will be retired. For the purchase of an individual animal, what is the value to Sarah of knowing ahead of time whether or not that variety will be retired?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

bfulkerson77

  • Sr. Member
  • ****
  • Posts: 331
Answer to Question 1

d

Answer to Question 2

If Sarah did not know whether a variety is to be retired, her expected value of a purchase is
(.75  -5 ) + (.25  95 ) = -3.75 + 23.75 = 20.
If she knows ahead of time that a variety won't be retired, she won't buy one. So, her expected value becomes (.75  0 ) + (.25  95 ) = 23.75.
The information that a variety will or will not be retired is worth 3.75 to her.




jjjetplane

  • Member
  • Posts: 556
Reply 2 on: Jul 1, 2018
:D TYSM


ebonylittles

  • Member
  • Posts: 318
Reply 3 on: Yesterday
Great answer, keep it coming :)

 

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

Did you know?

In the United States, congenital cytomegalovirus causes one child to become disabled almost every hour. CMV is the leading preventable viral cause of development disability in newborns. These disabilities include hearing or vision loss, and cerebral palsy.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

Certain rare plants containing cyanide include apricot pits and a type of potato called cassava. Fortunately, only chronic or massive ingestion of any of these plants can lead to serious poisoning.

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

For a complete list of videos, visit our video library