A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 75 percent chance the recession will end in six months and profits will return to $400 million. However, there is a 25 percent chance the recession will not end in six months, resulting in a $5 million loss. The expected profits over the next six months are:

State three country characteristics that encourage and three that discourage economic integration among developing countries

What will be an ideal response?

Consider Jen, a consumer with preferences U(H,F) = F1/3H2/3, where H is the quantity of housing and F is the quantity of food (per month)

Suppose Jen has a stipend of $600/month which she uses to purchase food at a price of $1/unit and housing at a price of $10/unit. a. Compute Jen's utility-maximizing bundle of goods. b. Suppose that Jen's employer subsidizes housing by paying 50% of her total housing costs, thereby effectively lowering the price Jen pays for housing to $5/unit. Compute Jen's new optimal consumption bundle. c. How much does Jen's employer pay in total for this subsidy? How much utility does Jen enjoy with this subsidy (compute her utility at the optimal bundle). d. Suppose that her employer simply gave Jen the dollar cost you found in (c) as a lump sum (instead of subsidizing housing). Will Jen gain a higher utility from the housing subsidy or the lump-sum equivalent transfer?