BNP 13.1 (a) (b) (c)Case:• The state is trying to increase enrollment of eligible kids in Medicaid byhiring a subcontractor to register families at the state fair.• The subcontractor has the option of paying $1000 to hire extra workers forthe job (i.e., high effort) but will only choose to do that if it increases theiroverall payoff.• The success of the project depends on both the effort level of thesubcontractor and on whether there is good turnout or bad turnout at the statefair.• The potential benefits of the registration program are estimated as:HighEffort*LowEffortGoodTurnout(Prob. 0.2)$100,000$40,000BadTurnout(Prob. = 0.8)$40,000$20,000To induce high effort, the state offers the contractor a $10,000 bonus payableonly if the benefit reaches $100,000.Questions:(a) Comparing Expected Values with & without the Bonus, Calculate theExpected Benefit to the State from the $10,000 Bonus?(b) Calculate the Expected Benefit to the Subcontractor from the $10,000Bonus?(c) Is Offering the Bonus a Pareto Improvement over Not Offering it?

1. Without the bonus, the expected benefit to the state is calculated as follows:2. With the bonus,…

Questions: (a) Comparing Expected Values with & without the Bonus, Calculate the Expected Benefit to the State from the $10,000 Bonus? (b) Calculate the Expected Benefit to the Subcontractor from the $10,000 Bonus? (c) Is Offering the Bonus a Pareto Improvement over Not Offering it?

Questions: (a) Comparing Expected Values with & without the Bonus, Calculate the Expected Benefit to the State from the $10,000 Bonus? (b) Calculate the Expected Benefit to the Subcontractor from the $10,000 Bonus? (c) Is Offering the Bonus a Pareto Improvement over Not Offering it?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Suppose a firm in a competitive market faces a market price of $6. If the firm produces a level of…

A: This can be described as a form of market in which no single producer or consumer has the power to…

Q: Suppose now the government passes a law that significantly increases the minimum wage. This change…

A: The natural rate of unemployment is the sum of the frictional unemployment rate and the structural…

Q: 1. The graph below shows the Demand Curve and Supply Curve for a particular item (a) Label the…

A: ***Since the student has posted multiple questions, the expert is required to solve only the first…

Q: Given the Phillips Curve model below, suppose the economy is in an inflationary gap. and…

A: The link between unemployment and price inflation in an economy is depicted by the Phillips Curve…

Q: Fill in the price and the total and marginal revenue Talero earns when it produces 0, 1, 2, or 3…

A: Total Revenue is the total earnings that the producer earns from the sale of the output produced.…

Q: Problem 10-49U Overall: (______/10) On the graph paper included on the following page, draw a graph…

A: Monopoly:Monopoly is a market where there is one seller and many buyers. Seller sells the product…

Q: ou are the manager of a monopoly that sells a product to two groups of consumers in different parts…

A: Demand elasticity measures how sensitive a good's quantity desired is to variations in its price. It…

Q: Country Switzerland Australia Belgium Singapore Finland Germany South Korea Kuwait Vietnam Russia…

A: Real Exchange Rate Calculation: The real exchange rate is calculated by adjusting the nominal…

Q: Consider two labor markets, an eastern state and a western state, that enact different laws…

A: Considering the fact that labour has the ability to disrupt the economy's operation, the labour…

Q: 09. Consider the following model. Expenditure is given by: E=C+I+G The consumption function is…

A: The objective of the question is to find the correct representation of income as a function of…

Q: Discuss an expansionary fiscal policy on the keynesian cross and illustrate it.

A: Fiscal policy refers to the use of government spending and taxation to influence the economy. It is…

Q: i. ii. iii. Assume a demand curve is given as Qd = 25 - 5p where Qd is the quantity demanded of a…

A: Market equilibrium is the state at which market demand curve intersects the market supply curve. At…

Q: The following table shows Uma's estimated annual benefits of holding different amounts of money:…

A: The average money holding and the total benefit for the consumer is given below. Average Money…

Q: 4. The equation of exchange The equation of exchange is given by M x V = PxY, where M is the money…

A: The combined impact of aggregate demand and supply, coupled with the quantity theory of money, molds…

Q: 12.02-PR004 CustomMetalworks is considering the expansion of their cable fabrication business for…

A: 5 indivisible projects are given below:Each investment will provide an exit with full return of the…

Q: If combine the accounting definition E= C+I and the consumption function C=co + cY to give an…

A: The consumption function represents the consumption expenditure in an economy based on its…

Q: 10 0 10 20 30 Puzza West Lothian 20 1319 10 O 10 20 Pizza East Lothian 30 In the accompanying…

A: The PPF is also referred to as the production possibility curve (PPC). The production possibilities…

Q: in the lower half of any linear demand curve is

A: Price elasticity of demand measures the responsiveness of change in quantity demand to change in…

Q: Consider the only internet service provider in a small town, which you can assume operates as a…

A: Monopoly is a form of imperfect competition. There is one firm. The number of consumers is high.…

Q: Use the following information to calculate poverty rates for the following two countries, Woolandia…

A: The poverty line is a predefined income threshold used to determine the minimum income deemed…

Q: 2010 2011 2012 2013 2014 $700 $600 $800 $750 $1000 a. Plot the aggregate consumption function. b.…

A: The value of disposable income and consumption spending is tabulated below:YearDisposable income ($…

Q: Matthew Rafferty produces hiking boots in the perfectly competitive hiking boot market. The table…

A: AFC = TFC/ Output AVC = TVC/ OutputATC = TC /Output MC = TCn - TCn-1TFCIt is constant at each level…

Q: A risk-averse expected-utility maximizer has initial wealth w0 and utility function u. She faces a…

A: GivenInitial wealth = w0Utility function = uLoss = L Probability of Loss = Amount covered by…

Q: 8. Macroeconomic factors that influence interest rate levels Apart from risk components, several…

A: 1] When the Fed increases the money supply, short-term interest rates tend to decline.True: An…

Q: The newspaper article from Barbados below where Interest rate increases by central banks constitute…

A: The objective of the question is to illustrate the impact of an increase in interest rates, a…

Q: Since the 1990s, trade openness A) has increased more for developed countries than for developing…

A: Trade openness refers to the measure of free trade that measures the amount of openness a country…

Q: Suppose that the marginal cost of laundry service is $1 per item, and the price - elasticity…

A: Marginal cost is $1.i.e., MC = 1The price-elasticity of demand is 4.i.e., Ed = 4

Q: (a) What is an Efficiency Wage? (b) Why is it Profitable for the Firm to pay an Efficiency Wage when…

A: Wage refers to the payment or monetary compensation that an employer provides to its employee for…

Q: Use this table to answer the following question. Output Total Variable Cost 1 $20 2 $24 3 $33 4 $40…

A: The total cost is the total expenditure done by producer in the production process. There are two…

Q: Alison Bob Television $20 $12 A. $12, $18 B. $12, $24 C. $20, $18 D. $20, $24 Internet $18 $24…

A: Marginal willingness to pay represents the additional amount a consumer is willing to spend for one…

Q: The classical dichotomy implies that nominal variables are not affected by real variables. True or…

A: INTRODUCTION: The classical dichotomy, originating from the works of economists like David Hume and…

Q: Questions 1. Even though Professor Ramirez deviated from the college’s policy regarding…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: PROBLEM (4) Firm A and Firm B with identical total costs TCÂ(QA) = and TCB(QB) = are producing…

A: The Cournot competition is a type of oligopoly where two firms compete with each other by choosing…

Q: Setting price equal to MC means the firm will produce too little output to stay in business. It must…

A: A natural monopoly occurs when a single firm can provide a good at a lower average cost than…

Q: Given a consumption function, C = c0 + cY, specified such that the marginal propensity to consume is…

A: The objective of the question is to determine the increase in consumption (C) given an increase in…

Q: 3. The graph below shows the AD-AS model for the US in long-run equilibrium. Label both axes and the…

A: AS-AD model is a way of illustrating national income with respect to changes in price level. The…

Q: MAC_1 = 11 - 2E_1 MAC_2 = 8.5 E_2, and assume marginal external damages ( MED) from the aggregate…

A: Externality is the External cost or benefit that is borne by the third party. When external cost is…

Q: Figure: Producer Surplus Price of book $45 35 Y 15 5 drew Donna Reference Ref 6-6 Chartes Quantity…

A: Producer surplus is the difference between the revenue received and revenue expected on certain…

Q: Now assume the egg industry is in long run equilibrium. Diagram long run equilibrium. Health…

A: The link between the amount of a product provided and its price, while maintaining other variables…

Q: PROBLEM (4) Firm A and Firm B with identical total costs TCA (QA) = and TCB (QB) = are producing…

A: There are 2 firms- Firm A and Firm B.Total CostsDemand functionsThe firms are producing related…

Q: iv. What is the value of price elasticity of demand in relation to the initial equilibrium (part i)…

A: Market equilibrium is the state at which market demand curve intersects the market supply curve. At…

Q: Assume the following to be a portion of the simplified balance of payments statement for a…

A: The simplified balance of payment table for the given economy is stated below.…

Q: In the article Rebecca Allensworth, a professor at Vanderbilt Law School, explains that the Columbus…

A: A monopoly refers to a market structure in which a single seller or entity dominates the supply of a…

Q: As part of their investment strategy, the Carringtons have decided to put $100,000 into stock market…

A: An optimal investment strategy is a plan of action that undertakes an analysis of cost and returns…

Q: A1. Milk or meat production Y per day is best explained by the inputs: feed needed per day in kg,…

A: Revenue Function : R(X1, X2 ) = p X1a X2bWhere , X1 = Feed , X2 = Cow or calves Constraint function…

Q: True or false, the economic damages of biodiversity loss are normally internalized into commercial…

A: The externality is defined as the cost or benefit that is unrelated to the third party involved. It…

Q: People expect the Canadian dollar to be 0.9 US dollars. The interest rates were equal in the two…

A: Uncovered Interest Parity (UIP) is an economic concept that expresses the relationship between…

Q: If the Commercial Bank borrows an additional total of $200 million from the Central Bank but…

A: Central bank basically refers to the institution that uses its monetary policy to maintain the…

Q: (2022 Spring Final Q65-69) Suppose a railway monopolist faces a demand curve and total cost curve…

A: Demand curve: P = 144-0.5QTotal cost: TC = 3864+5QMarginal Cost: MC = 5

Q: If provision of vaccines is left to a private market with no adjustment for the positive externality…

A: This can be described as a form of market in which no single producer or consumer has the power to…

Question

100%

BNP 13.1 (a) (b) (c)
Case:
• The state is trying to increase enrollment of eligible kids in Medicaid by
hiring a subcontractor to register families at the state fair.
• The subcontractor has the option of paying $1000 to hire extra workers for
the job (i.e., high effort) but will only choose to do that if it increases their
overall payoff.
• The success of the project depends on both the effort level of the
subcontractor and on whether there is good turnout or bad turnout at the state
fair.
• The potential benefits of the registration program are estimated as:
High
Effort*
Low
Effort
Good
Turnout
(Prob. 0.2)
$100,000
$40,000
Bad
Turnout
(Prob. = 0.8)
$40,000
$20,000
To induce high effort, the state offers the contractor a $10,000 bonus payable
only if the benefit reaches $100,000.
Questions:
(a) Comparing Expected Values with & without the Bonus, Calculate the
Expected Benefit to the State from the $10,000 Bonus?
(b) Calculate the Expected Benefit to the Subcontractor from the $10,000
Bonus?
(c) Is Offering the Bonus a Pareto Improvement over Not Offering it?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: a) Calculating the Expected Benefit to the State from the $10,000 Bonus:

VIEW

Step 2: b) Calculating the Expected Benefit to the Subcontractor from the $10,000 Bonus:

VIEW

Step 3: c) Is Offering the Bonus a Pareto Improvement over Not Offering it?

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

In flexibility (horizontal axis) and wage (vertical axis), isoprofit curves slope downward because (a) profits increase with the number of workers the firm employs. (b) workers are willing to accept a lower wage in exchange for job flexibility. (c) profits are constant with respect to flexibility. (d) in order to keep profits constant, a higher wage must be offset by the firm saving money by not providing workers with flexibility. Typed and correct answer please. I ll rate
a b C $40; $40 $40; zero $150,000; $150,000 zero; $40
corporation is the most common type of business organization in the United States. (© a) True ( b) False
5. Assume EUAB -SI8,733 ( ia notf). The BenefitCost ratio is closest to a) 1.49 b) 1.45 c) 1.58 d) 1.73 c) 2.19 0241 ) 2.07
10 Rate of Interest (%) 2 8 00 9 0 100 200 Amount of Money Demanded ($B) D1 OS D₁ D3 + D2 10 Rate of Interest (%) N 8 6 0 D2 11 100 200 300 400 Amount of Money Demanded ($B) 10 Rate of Interest (%) 2 8 9 Which one of the lines represents the asset demand for money? 0 S D3 100 200 300 400 500600 Amount of Money Demanded ($B)
Please explain Question 1 (a) (b) (c) Precisely without confusion.
K L Q MPL APL (Q/L) VML (MPL*P) FC VC (L*150) TC 5 0 0 0 0 5 1 50 50 50 50 25 150 175 5 2 125 75 62.5 150 25 300 325 5 3 225 100 75 200 25 450 475 5 4 375 150 93.7 300 25 600 625 5 5 450 75 90 150 25 750 775 5 6 450 0 75 0 25 900 925 5 7 400 -50 57.14 -100 25 1050 1075 5 8 425 -75 53.12 -150 25 1200 1225 5 9 450 -25 50 -50 25 1350 1375 5 10 500 -50 50 -100 25 1500 1525 5 11 525 25 47.7 50 25 1650 1675 Define the Firm’s Variable Costs. Next, what is the VC in the Table above?
K L Q MPL APL (Q/L) VML (MPL*P) FC VC (L*150) TC 5 0 0 0 0 5 1 50 50 50 50 25 150 175 5 2 125 75 62.5 150 25 300 325 5 3 225 100 75 200 25 450 475 5 4 375 150 93.7 300 25 600 625 5 5 450 75 90 150 25 750 775 5 6 450 0 75 0 25 900 925 5 7 400 -50 57.14 -100 25 1050 1075 5 8 425 -75 53.12 -150 25 1200 1225 5 9 450 -25 50 -50 25 1350 1375 5 10 500 -50 50 -100 25 1500 1525 5 11 525 25 47.7 50 25 1650 1675 Define firm’s fixed costs. Next, what is Firm’s FC in the Table above. Why?
15-23 For the following projects what is the opportunity cost of capital if the budget is (a) $60,000, and (b) $120,000? If Project 4 has an external environmental cost of S1000 annually that is included, (c) how does this change the answer to (a)? (d) How does this change the answer to (b)? G Project Life (years) First Cost Annual Benefit Salvage Value 1 20 $20,000 $4000 2 20 20,000 3200 $20,000 30 20,000 3300 10,000 15 20,000 4500 5 25 20,000 4500 -20,000 6. 10 20,000 5800 7 15 20,000 4000 10,000 4.
A company has established that the relationship between the sales price for one of its products and the quantity sold per month is approximately D = 780 - 10p units. The fixed cost is $800 per month and the variable cost $30 per unit produced. What number of units, D*,should be produced per month and sold to maximize the profit per month related to the product? A 300 B 280 C) 480 D 240
SNA Framework must be: Question 8Answer a. Timely b. Comprehensive c. Definite d. Adjustable
2. If a community makes different spending decisions when offered a block grant or, alternatively, a categorical grant of equal size, we know that (a) The community reaches a higher level of social welfare under the block grant. (b) The categorical grant elicits more spending in the designated category than the block grant does. (c) The categorical grant elicits a level of community expenditures in the designated category equal to the size of the grant. (d) All of the above. Choose the relevant option and provide a detailed justification and a graphical illustration.