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Independence Of Risks And Insurance

Chapter 11 1. Why does the assumption of independence of risks matter in the example of insurance? What would happen to premiums if the probabilities of house burning were positively correlated? 14. Small firms can discover the abilities of their workers more quickly than large ones because they can observe the workers more

Outsource housekeeping practices

Do you think that Hyatt practiced SHRM in deciding to outsource housekeeping? Can you determine if it improved or hurt the bottom line? What would you have advised Hyatt management to do to remain competitive now and in the future? Text Hyatt Report When the housekeepers at the three Hyatt hotels in the Boston area we

The theory and estimation of cost

The Central Publishing Company is about to publish its first textbook in managerial economics. It is now in the process of estimating costs. It expects to produce 10,000 copies during its first year. The following costs have been estimated to correspond to the expected copies. a.Paper Stock $8,000 b.Typesetting $15,000 c.Pr

Suppose the corporate income tax were eliminated and corporate income allocated to shareholders on a pro rata basis according to their proportion of outstanding stock. How would such a change in tax policy affect the excess burden and incidence of the tax, assuming that all forms of investment income are included in a comprehensive income tax base?

Suppose the corporate income tax were eliminated and corporate income allocated to shareholders on a pro rata basis according to their proportion of outstanding stock. How would such a change in tax policy affect the excess burden and incidence of the tax, assuming that all forms of investment income are included in a comprehens

Production Estimation

a. Discuss the problems of measuring productivity in actual work situations. b. How might productivity be measured for each of the following industries? i. Education (e.g., elementary and secondary education, higher education - undergraduate and graduate) ii. Government (e.g., the Social Security Office, the Internal Revenue

Genentech's Drug Avastin

As more potentially life-saving, but expensive drugs come to market, patients and insurance companies have difficult decisions to make. While in theory people would pay anything to save their own life or that of a family member, the efficacy of some of these drugs is uncertain and some are not curative. For example, Genentech's

Suppose the corporate income tax were eliminated and corporate income allocated to shareholders on a pro rata basis according to their proportion of outstanding stock. How would such a change in tax policy affect the excess burden and incidence of the tax, assuming that all forms of investment income are included in a comprehensive income tax base?

Suppose the corporate income tax were eliminated and corporate income allocated to shareholders on a pro rata basis according to their proportion of outstanding stock. How would such a change in tax policy affect the excess burden and incidence of the tax, assuming that all forms of investment income are included in a comprehens

Each of the following affect the supply for insurance

How will each of the following affect the supply for insurance? a. a larger pool of insured persons b. lower administration costs for insurance companies c. higher premiums (with no change in risk experience) d. a greater degree of risk aversion on the part of insurers

Elasticity is discussed.

a. Discuss your view of elasticity of gasoline based upon the changes we have experienced during the past few years. b. Why is the long run elasticity greater than the short run elasticity for gasoline? c. Under what economic situations will public transportation present potential competition to private automobiles?

Consider a society with two people. Rosa earns an income of $120,000 per year and Jake earns an income of $45,000 per year. The government is considering a redistribution plan that would impose a 23% tax on Rosa's income and give the revenue to Jake. This policy distorts Rosa's and Jake's incentives, such that instead Rosa retaining $92,400 and Jake ending up with $72,600, Rosa would have an income of $77,000, and Jake would have an income of $65,000 if this redistributive plan were implemented. Specifically, since Rosa will not receive the income she earns, she decides to work less and earn an income of only $100,000, of which $23,000 (23% of $100,000) will be owed in taxes. So Rosa will take home an income of $77,000. The $23,000 that Rosa pays in taxes will be transferred by the government to Jake. Since Jake now receives payment from the government, he will not work as many hours and will earn an income of $42,000 instead of his initial $45,000. So Jake total income, which includes his income from work and the government payment will be $42,000 + $23,000=$65,000. Without a redistribution plan, total income in this society is ___________. After the redistribution plan is implemented, total income in this society is___________. Therefore, the redistribution plan ______________total income in this society.

Consider a society with two people. Rosa earns an income of $120,000 per year and Jake earns an income of $45,000 per year. The government is considering a redistribution plan that would impose a 23% tax on Rosa's income and give the revenue to Jake. This policy distorts Rosa's and Jake's incentives, such that instead Rosa re

Economics questions

1. (Part A - You are considering an upgrade at a chip manufacturing plant. A new VLSI testing station costs $100,000, installed. It will save $50,000 per year in labor costs. Use five-year tax life and a tax rate of 40%. Find the rate of return (IRR). (Use two sig. figs.)) Part B- If the unit requires reprogramming calibratio

Net Present Value Method

1. - Colgate Distributing Company has the option to provide to its sales representatives a car or reimburse them the mileage for the use of its own cars. If the company provides the car, it will pay all the expenses related to it, including gas for business travels. The estimations are as follow: Car cost $15,000 Estimated Li

Assume the U.S. decides to implement a system of national

Assume the U.S. decides to implement a system of national health insurance that provides to all citizens a basic benefit package that covers most necessary services. Those who wish to purchase private insurance may do so, but they will not be covered by national insurance and will have to pay all their medical expenses. What do

State government leby tariffs on imports

Why not have State governments levy tariffs on imports, or tax other states' products. Would this be a sensible way to raise revenues? What are the advantages/disadvantages? Provide research to support positions. Brief with bullet points will suffice.

medical research and training

Who should pay the costs of medical research and the costs of training new physicians? Should these be paid by the government through Medicare and Medicaid? By government directly through tax dollars? By health insurers? Consider each and explain why you think it is appropriate or not.

Summarize the provisions of HSAs.

The Medicare Modernization Act of 2004 included a provision authorizing the establishment of health savings accounts or HSAs. Such accounts have been proposed in the past, both in this country as medical savings accounts (MSAs) and in other countries, as one mechanism to extend health insurance to those without it and to provide

Some of our individual needs for health care services later in life are determined by choices we ourselves make earlier in life regarding our individual lifestyle. If you believe you will be covered by insurance or other third party payers later in life, how might this influence your individual behavior while young, and hence total demand for health care services for older people?

Some of our individual needs for health care services later in life are determined by choices we ourselves make earlier in life regarding our individual lifestyle. If you believe you will be covered by insurance or other third party payers later in life, how might this influence your individual behavior while young, and hence to

Find total benefit.

Suppose a firm is considering two different activities, activities X and Y, which yield the following schedule of total benefits shown below. The price of X is $2 per unit and the price of Y is $10 per unit. Total benefit of Total benefit of Level of Activity

Taste-for-Discrimination vs Statistical Discrimination

Males under the age of 25 must pay far higher auto insurance premiums than females in this age group. How does this fact relate to statistical discrimination? Statistical discrimination implies that discrimination can persist indefinitely, while the taste-for-discrimination model suggests that competition might reduce discrimina

Maximum Utilitarian Welfare in an Exchange Economy

Consider the problem of a social planner who wants to maximize utilitarian welfare in an exchange economy with two people. His objective is thus maxu1 + u2 ,where u1 and u2 are the utilities of the two individuals. Both have the same utility overconsumption c, so ui = u(ci ) = ln ci , i=1,2 (ln stands for the natural logarithm)

Health insurance and the rise of managed care are investigated.

In 1986, the US federal income tax system changed marginal tax rates so that the top marginal rate fell from 50 to 33 percent. Given the way that fringe benefits are negotiated, what would you expect to happen to the demand for health insurance as a fringe benefit? Why? Suppose, as a worker, your health insurance currently al

Calculation of the Multiplier Effect

What would be the effect of a cut in taxes of $200 billion if the marginal propensity to consume were .9? Why would this policy be different from simply having the government initiate a $200 billion spending program (assuming the income multiplier is 10)? Support your answer with hypothetical calculations.

The poverty rate and the effects of in-kind transfers.

The poverty rate would be substantially lower if the market value of in-kind transfers were added family income. The largest in-kind transfer is Medicaid, the government health program for the poor. Let's say the program costs $7,000 per recipient family. a. If the government gave each recipient family a $7,000 check instead of

External Social Cost: Should the Government Tax Donuts?

Given the nation's problems with obesity and the associated use of health care resources, is it appropriate for the government to use taxes and/or subsidies to encourage healthier diets? For example, there might be a tax on donuts, or subsidies on fresh vegetables. Explain.

The ATR as a percentage of economic profit

A corporation has $7 million in equity. During the tax year it takes in $4 million in receipts and earns $2 million in capital gains from the sale of a subsidiary. It incurs labor costs of $250,000, material costs of $500,000, and pays rent for structures of $250,000. Calculate the corporation's total accounting profit and, assu

Rationalize Lump-Sum Taxes

Explain why lump-sum taxes will not cause any losses in efficiency. Are lump-sum taxes feasible? Lump-sum taxes do not result in substitution effects, but they do affect prices. Is this a contradiction?

Most Effective Financial Management Practices

Discuss which financial management practices are most effective in creating and monitoring an operational budget and discuss which financial management practices are the least effective in creating and monitoring an operational budget.