Donald loves gambling. His favorite gambling activity is going to the horse tracks and betting on his favorite horse, Betty. Donald's weekly income is $100, which he takes to the tracks. Donald can only purchase $50 lottery tickets on Betty finishing 1st. Betty's probability of winning each race is .5 and in case of a victory Donald gets $100 per every ticket bought while he gets nothing when Betty doesn’t end up in the first place. 1. Suppose that Donald can only bet multiples of $50. Calculate the expected value of buying (i) no tickets, (ii) 1 ticket, and (iii) 2 tickets. Don’t forget to take into account that he has an initial wealth of $100. Is the reward of any of the options more worthy than the other? 2. Donald's utility function is u(x) = x 2 . Find his expected utility from buying (i) no tickets, (ii) 1 ticket, and (iii) 2 tickets. How many tickets will he buy? 3. Suppose Donald’s family wants to stop him from going to the horse tracks. They want to design a conditional cash transfer program in which Donald receives a weekly allowance with the condition of not going to the horse tracks. How much should this allowance be to convince Donald not to buy 2 tickets each week?

1) Suppose that long-run average cost increases from 50 to 75 when output increases from 10 to 20. Is the firm experiencing economies of scale, diseconomies of scale, or constant returns to scale.

The firm is experiencing ________________________________________.

2) Which of the four basic market structures best describes the market for hardware where you live? This is the market where you purchase nails, fertilizer,

1. Suppose that a monopoly faces the demand, marginal revenue, and cost schedules below.

1. What quantity maximizes profit?
   
   The monopoly Q = ____
   
2. What price maximizes profit?
   
   The monopoly P = ____
   
3. What is the maximum profit?
   
   The maximum profit is $____________.
   
4. What is the socially efficient quantity?
   
   The socially efficient Q = _____

What is the deadweight loss when the monopoly produces the monopoly Q instead of the socially efficient Q?

The deadweight loss = $_______

a. The price elasticity of a good is -4.2. What does this mean? What would happen to the total revenue collected if prices were to increase by 10% and explain your answer.

b. The income elasticity of a good is 0.25. What does this mean? What can we conclude about this good and explain how you came to this conclusion?

c. The cross-price elasticity of a good is -1.5. What does this mean? What can we conclude about this good and explain how you came to this conclusion?

How do entrepreneurs engage in active search to discover opportunities? What role does alertness play in discovering opportunities?

Reflect on the idea of product. What is a product? When people buy products, what are they really buying?

how is AstraZeneca hoping to deal with the price level differences between developed and developing country markets?

What do you say about the differences and similarities between Turkish Central Bank (TCMB) and The US Fed?

Firm X is the only firm in its industry. Currently, Firm X charges $75 per unit, a price well in excess of its marginal cost of $5 per unit, and earns $70 million per year in profit. According to a trusted source, the manager of Firm X learned that a new firm is contemplating entering the market. This would reduce its profit to $40 million per year. If Firm X expanded its output and lowered its price to $50, the entrant would find it unprofitable to enter the market, and Firm X would earn profits of $50 million per year for the indefinite future. Explain and show your work:

a. What pricing strategy is the manager of Firm X considering?

b. If Firm X was able to credibly commit to maintain a price of $50, would it be a profitable strategy? Explain.

Analyze and compare the four market structures with respect to their characteristics (perfect competition,oligopoly,monopolistic competition and monopoly).

illustrate with graphs