1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
professor190 [17]
3 years ago
7

An individual has utility function U(x)=x1/4U(x)=x1/4 for salary, and is considering new job offer which pays $80,000 with a bon

us. The bonus will be $0, $10,000, $20,000, $30,000, $40,000, $50,000, or $60,000, each with equal probability. What is the certainty equivalent of this job offer?
Business
1 answer:
vladimir2022 [97]3 years ago
5 0

Answer:

108,280.22

Explanation:

Certainty equivalent is solved by taking the inverse utility function from the expected utility of a random wealth variable

U(x) = x^1/4

U^-1(x) = x^4

U^-1(x) === x^4

CE(x) = x^4

Salary   Bonus   Total income   U(x)= x^(1/4)       P(x)        U(x)*P(x)

80000       0          80000               16.82                1/7             2.4

80000    10000     90000               17.32                1/7            2.47

80000    20000    100000              17.78                1/7            2.54

80000    30000    110000               18.21                 1/7            2.6

80000    40000    120000              18.61                 1/7            2.66

80000    50000    130000              18.99                1/7            2.71

80000    60000    140000              19.34                1/7             <u>2.76</u>

Sum                                                                                             <u>18.14</u>

CE(x) =  18.14^4

CE(x) = 108280.22

So therefore,  the certainty equivalent of this job offer is 108,280.22

You might be interested in
Which result is a positive aspect of globalization
xxTIMURxx [149]
More efficent markets
8 0
3 years ago
Read 2 more answers
Which of the following statements regarding diversity in the workplace is true? a. Nearly 73 percent of Fortune 500 companies no
kvasek [131]

Answer:

C

Explanation:

Diversity in the workplace is about bringing together people of different background , physical appearance ,religion , education , age etc.

Even though of of the answer options narrowly talk about gender diversity , the employment policy of US in having over 50% of foreign born workers in the economy is wider as this would have covered citizens of different country with various cultures and tribes , different genders , color , religion and appearance and a whole lot more.

3 0
3 years ago
During October the plant produced 8,000 ingots and incurred the following costs: a. Purchased 33,000 pounds of materials at a co
goldfiish [28.3K]

Answer: Total Variable Costs = $110130

Explanation:

The question in incomplete. Requirements were not provided in the question, as a result it is not clear what the question requires us to do. We will assume the question requires us to calculate Total variable costs since There is nothing in the question that talks about fixed costs.

Total Variable Costs

Manufacturing costs

Direct Material Per pound = $2.95

Direct Material used  = 27800 pounds

Direct Material Cost = 27800 x 2.95 = $82010

Direct Labor

Direct Labor cost per hour = $6.20

Direct Labor hours = 3800

Direct Labour Cost = 3800 x $6.20 = $23560

Variable Manufacturing overhead cost = $4560

Total Variable Costs = Direct Material cost + Direct labor costs + Variable Manufacturing overhead

Total Variable Costs = $82010 + $23560 + $4560

Total Variable Costs = $110130

7 0
3 years ago
51502194 I hate you can everyone please report him
Assoli18 [71]

Answer: why do you hate this person so much

Explanation:

7 0
3 years ago
Read 2 more answers
A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result
Mariana [72]

Answer:

a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease

Explanation:

Here are the options

a decrease in the equilibrium quantity of eggs and no change in the equilibrium price.

a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease.

a decrease in the equilibrium price of eggs; the equilibrium quantity may increase or decrease.

a decrease in the equilibrium price of eggs and no change in the equilibrium quantity.

Only a change in the price of a good leads to a movement along the demand curve of that good. Also, only a change in the price of the good would lead to an increase or decrease in the quantity demanded of that good.

Other factors other than the change in the price of the good would lead to a shift of the demand curve. Some of those factors include :

1. a change in consumers' expectation

2. a change in the taste of consumers

3. a change in income

A change in price of a good leads to a movement along the supply curve and not a shift of the supply curve.

Other factors other than a change in the price of the good would lead to a shift of the supply curve. Such factors include :  

1. A change in the price of input  

2. A change in the number of suppliers  

3. Government regulations  

A decrease in the demand for eggs would lead to a leftward shift of the demand curve for eggs. Price and quantity would fall as a result.

a decrease in the supply of eggs would lead to a leftward shift of the supply curve for eggs. Price would increase and quantity would fall.

Taking these two effects together, there would be a fall in equilibrium quantity and equilibrium price can either rise or fall depending on if demand or supply has a greater effect.

7 0
3 years ago
Other questions:
  • The millions of workers leaving the job market for the reasons given are A. not counted as unemployed in the BLS data because th
    9·1 answer
  • A tariff is a tax on exported goods.<br> a. True<br> b. False
    12·1 answer
  • If you want to know whether a company had a profit or a loss during a specific period of time, which financial statement would b
    5·1 answer
  • All citizens in America have _______ to form a group and push for what they want in the law. Additionally, the architects of our
    9·2 answers
  • Mr. Smith wishes to retire in 16 years. When he retires he would like to have $300,000 in his bank account. Mr. Smith's bank pay
    12·1 answer
  • In the demonstration, 360∘ of rotation (one full rotation) represents a sidereal day. You can actually measure the length of the
    10·1 answer
  • What happens when the government finances a job creation project through taxes and borrowing?
    9·1 answer
  • At what wage rate will there be excess labor supplied in the market?
    11·2 answers
  • A physical count of merchandise inventory on November 30 reveals that there are 96 units on hand. Cost of goods sold (rounded) u
    6·1 answer
  • What are The two segments of the organization's environment
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!