QUESTION An analyst working at production plant is asked to estimate the price of a chemical that is used in their production process. The chemical can be purchased from different suppliers. There are various attributes that quantify the quality of the particular chemical, and which may have an influence on its price. The analyst developed a linear regression model based these quality attributes in order […]

QUESTION Consider an economy composed of representative consumer and representative firm and where time flows discretely. The consumer lives infinitely, has one unit of time in each time period, and each period’s utility is u(c_t) = log c_t, determining each time period’s consumption to maximize the present value of the lifetime utility. The discount rate is ꞵ. The consumer’s initial assets are given as a_0. The […]

QUESTION How has the U.S. economy been doing in recent years? Why do you think that is? Gather relevant economic statistics, such as the growth rate of real GDP, the unemployment rate, and the inflation rate, to support your case. (Hint: use the information we’ve covered and you’ve researched in the data project about GDP, business cycles, unemployment, and inflation to build your argument). Did […]

QUESTION Is the nonrefundable tuition payment you made to your college this semester a sunk cost? Why or why not? Is the answer different if your college offers a full refund should you drop out of school in the first month? Provide support for your thoughts. Share a situation or two where you fell prey to the sunk cost fallacy. ANSWER Sunk Costs in Education: […]

QUESTION You have learned about supply and demand. You know that when prices go up, people buy less. When prices go down, people buy more. For example, if you went to the store to buy a pair of jeans, but the store was having a sale where if you bought one pair, you got a second 50% off, you probably left the store with at […]

QUESTION Gross domestic product (GDP) is a measurement of how much people produce of goods and services. What this means is that when more people are working, GDP goes up. When people are not working, GDP goes down. The more goods and services that are being produced, the healthier the economy. There is more money available to purchase goods and services, and there are more […]

QUESTION Analyse the effect on the product market of falling business and consumer confidence in the economy using the Aggregate Expenditure (AE) model; and demonstrate how changes in the product market transmit into the money market and the foreign exchange market – and in turn affect the product market, evidencing the continuous flows between markets AE model analysis – remember to explain the transition to […]

QUESTION Mr. Mark Farther is provided with a car that is leased by his employer. The monthly lease payments for 2019 are $470, including sales tax. During 2019, he drives the automobile a total of 21500 kilometers, of which 7500 are employment related. The automobile is available to him throughout the year. His employer paid a total of $5000 in operating costs. When he is […]

QUESTION A good friend of yours, Frank, just graduated college and is starting his first career job working as a game developer with a salary of $72,000. While Frank has an outstanding knowledge of information technology and developing cool “apps” for the iPhone, he has absolutely no idea how to organize his finances, and he wishes that he had taken a personal finance course while […]

QUESTION Suppose your utility function is 𝑈(𝐼)=1/100 I^9/5. You have purchased an investment that pays $7,000 with 85% probability and $11,800with 15% probability. Round all answers to two decimal places (example: 0.01). Part (a) Quantify the effect of risk on your utility. I’m looking for a numerical answer, measured in units of utility. Part (b) Suppose the option to take away all elements of risk […]