Please help me answer the following questions correctly.

Questions.

Questions on Market with Asymmetric Information:

11. Julia is a 28-year-old nonsmoking, non-drinking female of normal weight. Because of adverse selection in health insurance,

A) She will be charged less for her premiums than people who are higher risks.

B) She is less likely to buy health insurance than the average person, because policy premiums are based on expected medical expenditures of people who are less healthy than she is.

C) When she get health insurance, she will be less likely to take care of herself.

D) She must get health insurance early in life, and is likely to lose health insurance if she smokes, drinks to excess, or gains weight.

E) She is more likely than the average person to buy health insurance, because she is more likely to be offered it.

12. Consider a market in which high-quality and low-quality television sets are sold. Before consumers make a purchase, they do not know the quality of the sets, but the sellers do know. As compared to a situation where both consumers and sellers know the quality of the sets, this situation would

A) cause no change in the ratio of low to high-quality sets sold.

B) increase the fraction of high-quality sets sold.

C) increase the fraction of low-quality sets sold.

D) cause the average price of goods sold to rise.

13. Augustus bought his BMW convertible as a new car in 1998 and knows that it is in excellent condition. He now wants to sell it and knows that there are many other similar cars on the used car market that are lemons. As a result:

A) he should be able to sell my car at a premium price because of its excellent condition.

B) he will have to accept a lower price for his car because buyers might think that it is a lemon.

C) he will not be able to sell his car unless he offers some sort of guarantee.

D) he will get the best price for his car by selling it to a dealer.

14. Credit histories allow firms to

A) identify high-risk borrowers, so they can be eliminated and interest rates kept down for others.

B) increase the number of credit cards issued, and interest rates go up as a result.

C) increase the number of credit cards issued, and interest rates go down as a result.

D) lower the number of credit cards issued, and interest rates go up as a result.

E) increase market power in the credit card industry, raising interest rates.

15. The completion of a degree or course of study is a good labor market signal

A) only if what is learned in that educational process relates directly to the job the individual is being considered for.

B) only if there is a positive correlation between academic success and wage income.

C) primarily because individuals develop good habits in college that serve them well in other areas later on.

D) because all individuals have the opportunity (in the United States) to pursue higher education.

E) because people who possess the traits that make them more productive in the workplace have an easier time completing an education than those who don't.

16. When a moral hazard problem exists for automobile driving, the marginal cost of driving

A) is lowered, and the amount of driving done is raised above the efficient level.

B) is lowered, and the amount of driving done is lowered below the efficient level.

C) is raised, and the amount of driving done is raised above the efficient level.

D) is raised, and the amount of driving done is lowered below the efficient level.

E) is raised above the efficient level, but market forces keep the total amount of driving is kept at the efficient level.

Part I (311' points] 1. Use the following version of Model 1 to address pans a e. WP = on 411*]. + d2*K + d3*RM (1] Endogenous Exogenous L5 = so + 51*(wm)+ gram: (2) w. P, L, L'.Y K,RM,EITC L=L' {3) AD,C.I,T M,l-L,G Y = 100*L-7KJ (4) AD = k*Mz'P (5) EITC=earned income tax credit AD = C + I + G (6) C = 3* (Y-T) (7;. T = .25*Y (a) Y = AD (9) a. Determine the reduced form equation for employment. b. Determine the reduced form equation for output (income). c. Identify the Aggregate Supply curve. d. Use the results from a. b, and c to determine how an increase in the earned income tax credit (Elm-subsidies to low income workers) would affect employment. output. real wages, and the price level. Use the results from a1 b, and c to determine how a rise in governmental purchases [G] would affect employment. output, real wages. and the price level. Pan 1]. Answer two of the following three questions (20 points each]. Be sure to show your work. 2. Use the data in the table below to represent a household's consumption and income for each given year. - Use a xed weight index fLaspeyres] to determine how much income has changed for this household from year 1 to year 2. . Use a current weight index (Paasche) to determine how much income has changed from year 1 to year 2. . Use a chain weighted index to determine how much income has changed between the two years. Steak (pounds) Price Quantit $10 100 3. $20 80 The data in the table below describe key features of the trade relations between China and three of its major trading partners. Use these data to answer parts a. and b. Exchange rates are expressed in Chinese Yuan or Renminbi terms. Country Share of Exchange Rate Exchange Rate Price Index Price Index USA 30% 8.28 RMBJ$ 6.30 RMBI$ Trade 2012 zoos (CPI) 2012 (CPI) 1:15 RMBJEuro 3.25 RMBJEuro NA NA 12.9 Yen! RMB 12.8 YenJ'RMB 23D a. Calculate the trade weighted exchange rate for China for 2012, assuming that the 2005 rate equals 100. How much has it changed since 2005'? [Be ear-4h! to use appropriate units in your cofcufoomJ b. Assume that China's price index in 2005 was 100 and that for 2012. it stands at 130. How has the real exchange rate between the U.S 5:. China changed between 2005 and 2012'? c. Explain why the real exchange rate represents terms of trade. 100,000 lives aged 30 each paid (1000 x /), ) to set up an insurance fund. The insurance fund will pay RM1,000 at the end of year of death for those who died within 2 years from the fund inception. The value of by was determined using i = 3% and mortality follows the Illustrative Life Table. After the fund was set up, 143 actually died in the first year and 155 died in the second year, while actual investment return yields 3%. paid out. Determine the amount of fund at the end of second year after the death benefit has been A. [0 , 10,000) B. [10,000 , 12,500) C.[12,500 , 15,000) D. [15,000 , 20,000) 13. Z is the present value random variable for a special whole life insurance with death benefits payable at the moment of death of (x). You are given for t 2 0: (i) b, = 90.06t (ii) 6, = 0.06 (iii) Hx (t) = 0.033 Calculate Var[Z]. A.[0 , 0.05) B. [0.05 , 0.10) C.[0.10 , 0.15) D. [0.15 , 0.20) 14. For a 20-year pure endowment of 1 on (x), you are given: (i) Z is the present value random variable at issue of the benefit payment. (ii) i = 0.05 (ii) 20Px = 0.573 Calculate E (Z). A.[0.2077 , 0.2137) B. [0.2137 , 0.2197) C. [0.2197 , 0.2257) D.[0.2257 , 0.2317) 15. For a 25-year term insurance of 1 on (25), Z is the present value random variable at issue of the benefit payment, where the benefits of 1 are payable at the moment of death. You are given: s(x) = = 100-x ,0 5 x s 100 and i= 0.0497 , calculate E[Z]. 100 A. [0.158 , 0.191) B. [0.191 , 0.224) C.[0.224 , 0.257) D.[0.257 , 0.29)1. Consider the following representative agent model. The representative consumer has preferences given by 2(c, () = c+ Be where c is consumption, ( is leisure, and B > 0. The consumer has an endowment of one unit of time and ko units of capital. The representative firm has a technology for producing consumption goods, given by Y = zkaLl-a where Y is output, z is total factor productivity, K is the capital input, L is the labor input, and 0