Chance of the savings account losing half your money

Assignment Help Business Economics
Reference no: EM1320439

Q. Assume a person has a utility function over consumption today (C1) vs. consumption tomorrow (C2) given by: log (C1) + 0.9log (C2). Assume the person has access to a savings account that pays back an amount 3% also has $10to start.

a) Write down the person's budget constraint?

b) Illustrate what is the person's marginal rate of substitution of consumption today for consumption tomorrow?

c) Elucidate how much does the person save?

d) Assume there is a 50% chance of the savings account losing half your money. Elucidate how much does the person save now?

 

Reference no: EM1320439

Questions Cloud

Industrys profit maximizing output level : Illustrate what is the industry's profit maximizing output level. Is the organization in long-run equilibrium.
Determine forecasts value : Determine forecasts value
The work you are doing on the wall is : A car takes 9 s to go from v = 0 to v = 75 m/s at approximately constant acceleration. If you wish to find the distance travelled using the equation d = 1/2 at2, what value should you use for a.
Cityquery and productquery : Create a report by the city and another by the product, involving details of sales and sub-totals and totals for the quantity.
Chance of the savings account losing half your money : Assume there is a 50% chance of the savings account losing half your money. Elucidate how much does the person save now?
Explaining correlation rule : Correlation rule states that if X and Y are correlated, X has caused Y.
What current does the waffle iron carry : A truck travels beneath an airplane that is moving 190 km/h at an angle of 26? to the ground.
Suppose that the ground was perfectly flat : A 106 m long train begins uniform acceleration from rest. The front of the train has a speed of 23 m/s when it passes a railway worker who is standing 230 m from where the front of train started. What will be the speed of last car as it passes the..
Use mad to compare simple moving & weighted moving average : Use Mad to compare simple moving & weighted moving average

Reviews

Write a Review

Business Economics Questions & Answers

  Production levels also pricing for your widget facility

Illustrate what new decisions will you make regarding production levels also pricing for your Widget facility.

  Calculate the constant debt-gdp ratio

Calculate the constant debt-GDP ratio that the country can achieve if the country runs a primary budget deficit of 3%. Is this debt-GDP ratio stable.

  Minimum rate of return she needs to earn

If Anne is planning to invest her loan in an asset which she hopes to turn a profit on, Illustrate what is the minimum rate of return she needs to earn.

  Equilibrium level of income

Illustrate what is Nurd's equilibrium level of income. Illustrate what is likely to happen in the coming months if the government takes no action.

  Wyandotte chemical company

How much Wyandotte have to decrease the price of polyol to attain a 15% increase in the quantity sold.

  Mortgage-backed securities spread losses

Explain how did mortgage-backed securities spread losses during the mortgage default crisis.

  Explain how much additional profit do you earn using a two

Explain how much additional profit do you earn using a two-part pricing strategy compared with charging this customer a every-unit price.

  Quantity increase or decrease depends on demand

The equilibrium quantity increase or decrease depends on Demand

  What value of y survives

What value of y survives as a solution if all firms are competing for high ability workers.

  People in developing nations usually degrade

On the other hand, people in developing nations usually degrade also pollute their environments locally also Do not have the similar high level of technology to mitigate these effects.

  Demand for clothing also footwear

Elucidate how would you express the demand for clothing also footwear. Risks involved holds the most risk to the subcontractor.

  Presently lower than the profit maximizing level

You have become concerned to the rm's sales are presently lower than the profit maximizing level, given the marginal cost of $1500 per workstation.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd