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MAXImum [283]
3 years ago
5

Draw a utility function over income u( I) that describes a man who is a risk lover when his income is low but risk averse when h

is income is high. Can you explain why such a utility function might reasonably describe a person’s preferences?

Business
1 answer:
AysviL [449]3 years ago
6 0

Answer:

Suppose there is an individual who needs a certain level of income, I°, in order to stay alive.  An increase in income above that level of income I° will have a diminishing marginal utility.  Below I°, the individual will be a risk lover and will take unfair gambles and risks in an effort to make large gains in income. Above I°, the individual will purchase insurance against losses.

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The "invisible hand"
Gala2k [10]
Not guarantee that resources will be allocated efficiently nor that there will be equality.
6 0
3 years ago
Starr Corporation loaned $600,000 to another corporation on December 1, 2020 and, in exchange, received a 3-month, 8% interest-b
prisoha [69]

Answer:

                          Adjusting entry

Date    Account Title                      Debit        Credit

           Interest receivables           $4,000

           ($600,000*8%*1/12)

                   Interest revenue                            $4,000

           (To record accrued interest on note)

3 0
3 years ago
18. In the current year, Marc, a single taxpayer, has ordinary income of $35,000. In addition, he has $3,000 in short-term capit
Sergio039 [100]

Answer:

$36,000

Explanation:

The computation of the adjusted gross income for the present year is as follows:

= Ordinary income + short term capital gain - short term capital loss + long term capital gain

= $35,000 + $3,000 - $6,000 + $4,000

= $36,000

Hence, the adjusted gross income for the present year is $36,000

The same is relevant

5 0
3 years ago
Diminishing returns to physical capital means that when the amount of human capital per worker and the state of technology are h
-BARSIC- [3]

Answer:

a. a smaller increase in the marginal product of labor. 

Explanation:

The law of diminishing returns to physical capital states that as more and more input are added to fixed factors of production, output increases at a decreasing rate.

For there to be output growth, physical capital should be increased less than human capital and technological progress.

I hope my answer helps you

6 0
3 years ago
If Ana considers cake a substitute for Top Ramen noodles, and her quantity demanded for Top Ramen goes from 30 to 40 packets eve
kondaur [170]

Answer:

$0.35

Explanation:

The computation of the price elasticity of demand using mid point formula is shown below:

= (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price)

So, Change in quantity demanded would be

= Q2 - Q1

= 40 - 30

= 10

Now, Average of quantity demanded

= (40 + 30) ÷ 2

= 35

Change in price

= P2 - P1

= $35 - $15

= $20

And, the average of price would be

= ($35 + $15) ÷ 2

= $25

Cross price elasticity of demand = (10 ÷ 35) ÷ ($20 ÷ $25)

= 0.28 ÷ $0.8

= $0.35

5 0
3 years ago
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