3. (3%) What is the expected social surplus if Emma cannot breach the contract, namely, she must always pay the price \( p \) and trade with Francesca?

In practice, if a party breaches the contract, the court may order that party to pay the "expectation damages" to the trading partner (the victim of the breach). By definition, expectation damages compensate the victim an amount that would give her the same payoff had the contract been carried out. For the remaining questions, suppose that when Emma decides to breach the contract (i.e., refuse to trade with Francesca), Francesca has not yet incurred the cost, and Emma will be ordered to pay expectation damages. 4. (3%) What is the amount of expectation damages Emma should pay in case of breach?

5. (3%) What is the price $p, if any, that would induce the efficient trading rule? If there are more than one, find out all such prices; and if there is none, explain why.

Lastly, suppose that either Emma or Francesca can make extra efforts to improve Emma's consumption experiences. By making such efforts (at a cost $1), the probability of a benefit of $800 becomes $\frac{1}{2} + x$, and the probability of a benefit of $200 becomes $\frac{1}{2} - x$, where $0 < x < \frac{1}{2}$. 6. (3%) What is the social benefit of such efforts?

7. (3%) If Emma can make the efforts, what is the maximal value of \( I \) such that Emma is willing to do so?

8. (3%) If Francesca can make the efforts, what is the maximal value of \( I \) such that Francesca is willing to do so?

四、Both Gigi and Helen maximize the expected utility, with a (Bernoulli) utility function $u(x) = \ln x$, where $x$ is the amount of money they can enjoy. Each of them has an initial wealth $10, but may suffer from an accident that occurs with probability 1/4. 1. (3%) Are they risk neutral, risk loving, risk averse, or none of these?

2. (4%) Suppose that the accident inflicts a damage $2 to each of the two girls. Can Gigi and Helen make an arrangement of mutual insurance that would constitute Pareto improvement over the case of no insurance? If yes, how; and if no, why not?

3. (3%) Suppose that Helen will suffer a higher loss, $4 (while Gigi's damages of accident remain at $2). If Irene proposes the following arrangement: Gigi gives Helen $a > 0 if there is no accident, and Helen gives Gigi $b > 0 if the accident occurs. Will this kind of arrangement Pareto dominate no insurance?

4. (5%) Given that Helen's loss from the accident is $4, and Gigi's loss is $2, find out all the Pareto efficient mutual insurance schemes (not necessarily those described in the previous question), if exists.

114年 - 114 國立臺北大學_碩士班一般入學考試試題_經濟學系：個體經濟學#146546

112年 - [無官方正解]112 國立臺北大學_碩士班一般入學考試試題_經濟學系：個體經濟學#146523

110年 - [非官方正解]110 國立臺灣大學_碩士班招生考試_經濟學研究所:個體經濟學#123412

110年 - 110 國立政治大學_碩士班暨碩士在職專班招生考試_ 經濟學系:個體經濟學#105665

110年 - 110 國立中央大學_碩士班招生考試_經濟學系/不分組(一般生):個體經濟學#105315

110年 - 110 國立清華大學碩士班考試入學試題_經濟學系:個體經濟學#105241

110年 - 110 國立中山大學_碩士暨碩士專班招生考試_經濟所:個體經濟學#104433

109年 - 109 國立臺北大學_碩士班一般入學考試試題_經濟學系：個體經濟學#146548

102年 - 102 國立嘉義大學_碩士班招生考試試題_應用經濟學系：個體經濟學#146522

101年 - 101 國立嘉義大學_碩士班招生考試試題_應用經濟學系：個體經濟學#146521