A farmer lives on a flat plain next to a river. In addition to the farm, which is worth $F, the farmer owns financial assets worth $A. The river bursts its banks and floods the plain with probability P, destroying the farm
If the farmer is risk averse, then the willingness to pay for flood insurance unambiguously falls when A) F is higher, and A is lower.
B) P is lower, and F is higher.
C) F & A are higher.
D) P is lower, and A is lower.
E) A is higher, and F is lower.
E
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U.S. capital at the end of 2012 equals U.S. capital at the beginning of 2012 plus
A) gross investment during 2012. B) net investment during 2012. C) nothing, because capital can't change in just one year. D) gross investment during 2012 minus net investment in 2012. E) depreciation during 2012 minus gross investment during 2012.
Refer to the graphs below. Which graph shows an increase in the prices of X and Y, but no change in the buyer's budget?
A. Graph A
B. Graph B
C. Graph C
D. Graph D