Consider the world of Carolina. There are two types of people in Carolina. Type A people...

Consider the world of Carolina. There are two types of people in Carolina. Type A people make up 5% of the population and Type B people make of 95% of the population. Everybody knows their own type. Each Type A person experiences health costs in this way: 10% of the time their costs are $10,000 and 90% of the time their costs are $2,000. Each Type B person experiences health costs in this way: 8% of the time their costs are 5,000 and 92% of the time their costs are $1500. i. For Part i, assume that any insurance company can reliably observe what type each person is. If the insurer is selling actuarially-fair, full insurance what premium would they charge Type A people? What premium would they charge Type B people? Show your work/explain. ii. Now assume that any insurance company DOES NOT observe what type each person is. They sell one plan to everyone. If everyone buys (actuarially fair full) health insurance, what is the premium charged? Show your work/explain. iii. Given your answer in part ii, will Type A people buy the health insurance at that price? Given your answer in part ii, will Type B people buy the health insurance at that price? iv. Given your answers in part iii, does the insurance company want to change their price?

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Rahul Sunny answered 1 year ago

You are now asked to consider a world with two people, Jane and Jack. Jack is...

You are now asked to consider a world with two people, Jane and Jack. Jack is a farmer. Jane owns the land on which Jack farms and does not produce any output herself. There is only one good in this world, grain. a. Use a model of decision making under scarcity to show the allocation that maximises Jane’s economic rent when she can coerce Jack. Label all relevant axes, points and curves on your model. b. Use a separate model...

Consider an island served by a single ferry company. There are two types of people who...

Consider an island served by a single ferry company. There are two types of people who visit the island, day-trippers who come in the morning to enjoy the island’s beaches on a Saturday or Sunday (or sometimes on a weekday) and permanent summer residents who work in the city during the week but come to the island on Friday night to spend the weekend and then leave on Monday to return to work. The ferry has the following rate schedule:...

Consider a simple economy with two types of workers. There are capable workers (type A), constituting...

Consider a simple economy with two types of workers. There are capable workers (type A), constituting 70% of the population, with remaining workers (type B) being of average ability. There are two types of job opportunities as well, labeled Good and Bad. In a Bad job, either type of worker produces 20 units of output. In a Good job, Type A worker produces 80 units, and the Type B worker produces 0. The economy is doing well so there is...

a) Consider an economy with two types of firms, S and I. Type S firms always...

a) Consider an economy with two types of firms, S and I. Type S firms always move together, but type I firms move independently of each other. For both types of firms, the expected return of an individual firm is given by 5%, and the return volatility of an individual firm is given by 25%. i) (10 points) There is an equally-weighted portfolio made of 10 type S firms and 10 type I firms. What is the expected return and...

Question 2. Consider a simple economy with two types of workers. There are capable workers (type...

Question 2. Consider a simple economy with two types of workers. There are capable workers (type A), constituting 70% of the population, with remaining workers (type B) being of average ability. There are two types of job opportunities as well, labeled Good and Bad. In a Bad job, either type of worker produces 20 units of output. In a Good job, Type A worker produces 80 units, and the Type B worker produces 0. The economy is doing well so...

Question 2. Consider a simple economy with two types of workers. There are capable workers (type...

Question 2. Consider a simple economy with two types of workers. There are capable workers (type A), constituting 70% of the population, with remaining workers (type B) being of average ability. There are two types of job opportunities as well, labeled Good and Bad. In a Bad job, either type of worker produces 20 units of output. In a Good job, Type A worker produces 80 units, and the Type B worker produces 0. The economy is doing well so...

1. Identify two people you would consider to be excellent leaders. A. What type(s) of the...

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) Consider a company that has two types of employees: people who take orders from customers...

) Consider a company that has two types of employees: people who take orders from customers (“order-takers”) and people who deliver the ordered products (“delivery people”). Suppose that the company obtains a new technology that allows it to use computers to automate many of the tasks that its order-takers are currently doing. a. What effect would you expect this technology to have on the quantity of computers used by the company? Explain. b. What effect would you expect this technology...

Suppose there are two types of consumers: Type A and Type B. The demands for a...

Suppose there are two types of consumers: Type A and Type B. The demands for a monopolist’s product for each type of consumers are given by: Type A: Q = 90 – 2P Type B: Q = 60 – 4P Assume the marginal cost of production is constant and MC = 4, and there are no fixed costs. a) Suppose the firm is unable to distinguish between the two types of consumers, and therefore cannot engage in price discrimination. Sketch...

Suppose there are two types of consumers: Type A and Type B. The demands for a...

Suppose there are two types of consumers: Type A and Type B. The demands for a monopolist’s product for each type of consumers are given by: Type A: Q = 90 – 2P Type B: Q = 60 – 4P Assume the marginal cost of production is constant and MC = 4, and there are no fixed costs. a)Suppose the firm is unable to distinguish between the two types of consumers, and therefore cannot engage in price discrimination. Sketch the...

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Consider the world of Carolina. There are two types of people in Carolina. Type A people...

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You are now asked to consider a world with two people, Jane and Jack. Jack is...

Consider an island served by a single ferry company. There are two types of people who...

Consider a simple economy with two types of workers. There are capable workers (type A), constituting...

a) Consider an economy with two types of firms, S and I. Type S firms always...

Question 2. Consider a simple economy with two types of workers. There are capable workers (type...

Question 2. Consider a simple economy with two types of workers. There are capable workers (type...

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) Consider a company that has two types of employees: people who take orders from customers...

Suppose there are two types of consumers: Type A and Type B. The demands for a...

Suppose there are two types of consumers: Type A and Type B. The demands for a...