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2 months ago

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Suppose a family has saved enough for a 10 day vacation (the only one they will be able to take for 10 years) and has a utility

function U = V1/2 (where V is the number of healthy vacation days they experience). Suppose they are not a particularly healthy family and the probability that someone will have a vacation-ruining illness (V = 0) is 20%. What is the expected value of V?

1 answer:

stepan [3.5K]2 months ago

5 0

Answer:

2 Days

Explanation:

To clarify, we need to restate the utility function for clarity

U=V^{1/2}

1. Probability of an illness occurring in the family is 20%

2. If an illness occurs, the total number of days impacted is calculated as:

Total vacation days = 10 days x Probability of illness = 20%

= 10 x 0.2 = 2 days

This indicates that should an illness occur based on this probability, 2 out of the 10 vacation days will be affected

3. The number of remaining vacation days to enjoy would thus be 10-2 = 8 days

This indicates that even after accounting for 2 days of potential illness, the family can still enjoy their vacation period.

V= 2 days

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Spicy Dish, a large distributor of canned beans and salsa, is organized into four business units: (1) North America Salsa, (2) N

marusya05 [3725]

The choices for this inquiry are not provided; here is the section that is absent:

What two kinds of departmentalization can be seen in this instance?

A. Product and customer

B. Product and geographical

C. Customer and geographical

D. Functional and customer

E. Geographical and functional

The correct response to this query is B. Product and geographical

Explanation:

Departmentalization is the process of forming departments, units, etc., within businesses to enhance goal achievement and allocate roles and tasks. This can occur based on various factors such as geography, products, or functions.

In the situation of Spicy Dish, a distinct geographical departmentalization is apparent since the distributor has organized units according to location, allowing the company to have a unit in every significant geographical area like North America, Europe, etc. Additionally, this firm has established units according to products as it has created two distinct units in North America, with each focusing on a different product (beans/salsa.)

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1 month ago

When the price of a bar of chocolate is $1.00, the quantity demanded is 100,000 bars. When the price rises to $1.50, the quantit

arsen [3447]

Answer:

a. -1.25

b. -1.25

Explanation:

Price elasticity measures how demand varies with price fluctuations.

The formula is:

= % change in Quantity / % change in Price

a. If the price moves from $1.00 to $1.50, the elasticity of demand will be:

% change in Quantity calculated using the midpoint method;

$=\frac{Q2 - Q1}{\frac{Q1 + Q2}{2} } \\\\= \frac{60,000 - 100,000}{\frac{100,000 + 60,000}{2}} \\\\= -0.5$

% Change in Price calculated with the midpoint formula

$=\frac{P2 - P1}{\frac{P1 + P2}{2} } \\\\= \frac{1.5 - 1.00}{\frac{1.00 + 1.50}{2} } \\\\= 0.4$

= -0.5/0.4

=-1.25

b. If the price decreases from $1.50 to $1.00, the elasticity of demand is:

% change in Quantity calculated using the midpoint formula;

$=\frac{Q2 - Q1}{\frac{Q1 + Q2}{2} } \\\\= \frac{100,000 - 60,000}{\frac{100,000 + 60,000}{2}} \\\\= 0.5$

% Change in Price calculated using the midpoint formula

$=\frac{P2 - P1}{\frac{P1 + P2}{2} } \\\\= \frac{1.00 - 1.50}{\frac{1.00 + 1.50}{2} } \\\\= -0.4$

= 0.5/-0.4

= -1.25

7 0

1 month ago