S1W8

Peter Parker is buying fabric for his superhero costumer. However, at the checkout, he was presented with this question:

Presence of (Blank 1) in financial markets leads to (Blank 2) and (Blank 3) problems that interfere with the efficient functioning of the financial markets. Help Peter Parker fill in the blanks to become the Friendly Neighborhood Spiderman!

• asymmetric information

• Blank 1

• adverse selection

• Blank 3

• moral hazard

• Blank 2

Tony Stark and Dr. Bruce Banner are trying to identify which rocket types can be switched out for others for the Endgame by calculating MRS.

Help them out by finding the partial derivatives a) ∂f/∂x and b) ∂f/∂y of

f(x,y) = (x^4) + (x^3y^2) - 2(y^3)

• ∂f/∂x = 4(x^3) + 3(x^2y^2)
  
  ∂f/∂y = 2(x^3y) - 6(y^2)

• ∂f/∂y = 4(x^3) + 3(x^2y^2)
  
  ∂f/∂x = 2(x^3y) - 6(y^2)

• ∂f/∂x = 4(x^3y) + 3(x^2y^2)
  
  ∂f/∂y = 2(x^3y) - 6(x^2y^2)

Wanda Maximoff and her twin, Pietro Maximoff, created a game and whoever wins will get to blow up cities in allegiance to Ultron. Assuming you are a rational consumer, how much should you expect to pay in order to play this game? The rules of the game are as follows:

Flip a coin. If it comes down heads, you get 4 dollars. If tails, flip again.

If that coin comes down heads, you get 8 dollars. If tails, flip again.

If that coin comes down heads, you get 16 dollars. Otherwise flip again and so on.

• 16

• 28

• 32

• None of the above

Stephen Strange is risk-averse, Shang-Chi is risk-neutral and Tony Stark is risk-seeking.

Match their utility functions.

• Stephen Strange

• U = M

• Shang-Chi

• U = M^2

• Tony Stark

• U = sqrt(M)

Following the changes made in the multiverse, Peter Parker is just a regular guy and is seeking employment. He's searching for a high wage from a wage distribution that is uniform on the interval (4, 7). The cost of each search is 0.03. What is the smallest wage you should accept?

• W<5.21

• W>4.76

• W>5.53

• Not enough information provided

Let’s suppose that your best friend Hawkeye (Clint Barton) wants you to bet on a coin flip, with the loser paying the winner £400. If your initial wealth is £650, what is the expected utility from playing this round? What is your expected utility from not playing this round? Do note that Hawkeye is risk averse

• 23.563; 25.743

• 24.107; 25.495

• 24.624; 24.831

• 23.952; 24.673

Following the destruction of other multiverses, SHIELD have noticed an excessive amount of venomous snakes. So, for every venomous snake killed, SHIELD offered a financial incentive. Eventually, however, some clever civilians began to breed cobras for the income. What type of problem is this?

• Moral Hazard

• Adverse Selection

• True, True

• False, True

• True, False

• False, False

Thor has an investment opportunity that pays 80 with probability 1/4 and loses 40
with probability 3/4.
If his current wealth is M = 120, and his utility function is U(W) =√W Will he make
this investment?

• A. Yes

• B. No

You are tossing fair coins with Captain America. Which one of the three bets described below has the highest expected value?

• A. If it comes up heads you win 100 pounds; tails you lose 1 pound.

• B. If it comes up heads you win 200 pounds; tails you lose 80 pounds.

• C. If it comes up heads you win 10,000 pounds; tails you lose 9900 pounds.