Application_Problems_Ch02

Application_Problems - Chapter2: 1 Recent research on a couple of topics has revealed the following a Mandatory use of airbags has reduced the

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Chapter 2: Applications Problems 1. Recent research on a couple of topics has revealed the following: a. Mandatory use of airbags has reduced the number of traffic fatalities, but seems to have increased the number of accidents. b. Increasing the number of referees in NCAA basketball games from two to three was associated with a decline in the number of personal fouls per game. What fundamental economics assumption about the nature of human behavior gains support from these findings? How are these findings - and that assumption - relevant to management education? 2. You are considering two positions that have equivalent responsibilities and opportunities. One position offers a fixed salary; the other offers a compensation package that varies according to your effort as well as outside forces: a volatile market, and a small client base. In particular, position 1 would guarantee salary/benefits of $104,000 per year. In position 2, you calculate that you would earn $40,000 with 60% probability, and $200,000 with 40% probability. a. Calculate the expected value and variance of each salary offer.
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This note was uploaded on 09/23/2010 for the course ECON 305 taught by Professor Snyder during the Fall '10 term at Arizona Western College.

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Application_Problems - Chapter2: 1 Recent research on a couple of topics has revealed the following a Mandatory use of airbags has reduced the

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