Willy's Only Source of Wealth Is His Chocolate Factory

question 20

Multiple Choice

Willy's only source of wealth is his chocolate factory.He has the utility function pc^1/2_f + (1 - p) c^1/2_nf, where p is the probability of a flood, 1 - p is the probability of no flood, and c_f and c_nf are his wealth contingent on a flood and on no flood, respectively.The probability of a flood is p = 1/14.The value of Willy's factory is $500,000 if there is no flood and 0 if there is a flood.Willy can buy insurance where if he buys $x worth of insurance, he must pay the insurance company $4x/17 whether there is a flood or not, but he gets back $x from the company if there is a flood.Willy should buy

• A)enough insurance so that if there is a flood, after he collects his insurance, his wealth will be the same whether there is a flood or not.
• B)enough insurance so that if there is a flood, after he collects his insurance, his wealth will be 1/16 of what it would be if there is no flood.
• C)no insurance since the cost per dollar of insurance exceeds the probability of a flood.
• D)enough insurance so that if there is a flood, after he collects his insurance, his wealth will be 1/5 of what it would be if there is no flood.
• E)enough insurance so that if there is a flood, after he collects his insurance, his wealth will be 1/9 of what it would be if there is no flood.

Comprehend the significance of emotional cutoff and its implications in the family dynamic.

Understand the components and significance of formal hierarchies in organizations.

Recognize various coordinating mechanisms within organizations and their importance.

Identify the consequences of work specialization and division of labor.

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Definitions:

Elijah Muhammad

Leader of the Nation of Islam from 1934 until his death in 1975, he played a significant role in advocating for the empowerment and segregation of African Americans.

Cultural Independence

The state or condition of a culture being free from outside influence or control, maintaining its customs, languages, and traditions.

Black Power

A political slogan and a name for various associated ideologies aimed at achieving self-determination for people of African descent, popularized in the 1960s.

March Against Fear

A notable civil rights march in 1966 to challenge racial segregation and encourage African American voter registration in the U.S. South.