Answer:
C. A risk averse investor would choose the economy in which stock returns are independent because risk can be diversified away in a large portfolio.
Explanation:
if stock prices move together, (positive correlation), the volatility of the portfolio will be higher. Higher volatility means higher risk. This is the case with the first economy.
In the second economy however, the stocks are independent of each other meaning there is zero correlation between stocks and hence the portfolio volatility will be much lesser.
As a risk-averse investor you will prefer the portfolio with lower volatility for the same expected return.
Answer: Occurs only during a recession.
Explanation:
Cycling unemployment is a kind of unemployment where company lay-off workers because they can't meet up with their payments: as a result of a general drop in the demand for goods and services in the economy of country.
Cyclical unemployment are very common in recessions as companies then massively drop workers in their establishment due to general low economic activities.
Answer:
Imagine you have just flicked a lighter. If you don’t see the flame, you will naturally try a second time. If after the second attempt it does not strike a flame, you will repeat your action again and again until it does. Eventually, you’ll see the flame and you’ll know that your lighter works. But what if it doesn’t? How long are you going to flick the lighter until you decide to give up?
Our everyday life is full of such decision dilemmas and uncertainty. We constantly have to choose between options, whether we make the most ordinary decisions – should I continue flicking this lighter? – or life-changing choices – should I leave this relationship? We can either keep on doing what we are already used to do, or risk unexplored options that could turn out much more valuable.
Some people are naturally inclined to take more chances, while others prefer to hold on to what they know best. Yet being curious and explorative is fundamental for humans and animals to find out how best to harvest resources such as water, food or money. While looking at the Belém Tower – a symbol of Portugal’s great maritime discoveries – from my office window, I often wonder what drives people to explore the unknown and what goes on in their brains when weighing pros and cons for trying something new. To answer these questions, together with Dr. Zachary Mainen and his team of neuroscientists, we investigate how the brain deals with uncertainty when making decisions.
Explanation:
It is well known that the decision-making process results from communication between the prefrontal cortex (working memory) and hippocampus (long-term memory). However, there are other regions of the brain that play essential roles in making decisions, but their exact mechanisms of action still are unknown.
Answer:
1. Equilibrium price ,p = $1.20 per pound, equilibrium quantity = 95 million pounds.
2. Surplus = 0
Explanation:
1. From the question,
the equilibrium price = 1.20
The equilibrium quantity = 95 million per pounds.
Equilibrium is gotten when Quantity supplied = quantity demanded.
2. When price floor == $1.00
Quantity demanded = 101
Quantity supplied = 79
Monthly surplus = 79 - 101 = -22
Quantity demanded > quantity surplus.
This implies that there is no surplus.
Surplus = 0
3. If a decrease in cost of feeding cows shift supply by 40 million we will have new supply schedule =
New qs = Qs + 40
63+40 = 103
71+40= 111
79+40 = 119
87+40= 127
95 + 40 = 135
103 + 40 = 143
111+40 = 151
119 + 40 = 159
127 + 40 = 167
135 + 40 = 175
143 + 40 = 183
