FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Hello dear tutor, could you please help me to solve this problem please? Thank you very much in advance. Suppose a proposed public policy could

Hello dear tutor, could you please help me to solve this problem please? Thank you very much in advance.

Suppose a proposed public policy could result in three possible outcomes:

  1. present value of net benefit of $4,000,000
  2. present value of net benefit of $1,000,000
  3. present value of net benefit of -$10,000,000 ( a loss)

Suppose society is risk neutral and the probability of occurrence of each of these three outcomes are, respectively 0.85 , 0.10 and 0.05 should this policy be pursued or trashed? Why?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Econometrics
Essentials of Econometrics

Authors: Damodar Gujarati, Dawn Porter

4th edition

73375845, 978-0071276078, 71276076, 978-0073375847

More Books

Students explore these related Economics questions

Question

a. Consider three masses that you wish to add together: 3 g, 1.4 g, and 3.3 g. These numbers represent measured values. Add the numbers together and report your answer to the correct number of...

Answered: 3 weeks ago

Question

What is the Fourier transform of the triangular pulse in Fig. 18.27? f(0)

Answered: 3 weeks ago

Question

=+30. Market segmentation minimax. Aaron, who we met in Exercise 28, tends to be optimistic about business conditions. What is his maximax strategy that would maximize his results?

Answered: 3 weeks ago

Question

Luster Company has current assets of $130,000 and current liabilities of $80,000, of which accounts payable are $70,000. Lusters cost of goods sold is $460,000, its merchandise inventory increased by...

Answered: 3 weeks ago

Question

Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows: Sales Production April 58,000 68,000 May 48,000 58,000 June 68,000 58,000...

Answered: 3 weeks ago

Question

Little Town Hospital is a private, not-for-profit hospital. The following information is available about the operations. Gross patient services charges totaled $4,000,000. Included in the above...

Answered: 3 weeks ago

Question

W A planar wall (kw = 10- mK' , Lw = 0.5 m) is insulated on one side (q(0) = 0), with a known temperature on both sides (T(0) = 200C, T(L) = 50C). You know that the temperature profile is as follows:...

Answered: 3 weeks ago

Question

A county government hires lawyers to defend itself in lawsuits. The local government provides its legal staff with an office building. The table below shows how many cases can be handled with...

Answered: 3 weeks ago

Question

We are at the halfway point of this course and nearly through your time with SDI. It is the perfect time to pause and reflect. Reflect upon the learning experiences you have had so far in your SDI...

Answered: 3 weeks ago

Question

You are a project manager at Unisa Mining Solutions (UMS) and you are in a fairly good mood. Your firm develops systems to help miming firms reduce their exploration costs, and you have just returned...

Answered: 3 weeks ago

Question

For the following data, draw (by hand) the histograms for X1 and X2 and the scatterplot for X1 versus X2. Which variable(s) do think is (are) normal? Explain. X1 X2 3.9 2.5 2.7 5.1 3.4 5.6 3.3 7 3.4...

Answered: 3 weeks ago

Question

Imagine an electron jumps from the ground state to the n=54 state after absorbing a photon of 13.55 eV. A)How much energy must the electron lose before it returns to the ground state? B)What is the...

Answered: 3 weeks ago

Question

8. Give examples from your own everyday life that the reference point you use has significance for the actions you take.

Answered: 3 weeks ago

Question

6. Give examples of when we give a situation a new name, the situation is perceived differently.

Answered: 3 weeks ago

Question

11. Take a familiar problem as your starting point. a) Frame the problem so that it promotes aggressive behaviour. b) Frame the problem so that it promotes defensive behaviour.

Answered: 3 weeks ago

Previous Question Next Question