Draw his budget line including endpoints

Assignment Help Business Economics

Reference no: EM131244667

In a two year setting Rod has earnings of $8000 this year and earnings of $25,000 next year. He can borrow or lend at an interest rate of 25%. Draw his budget line including endpoints. What is the slope of the budget line? What is the interpretation of the slope? Suppose that Rod could choose, instead, to earn $22,000 this year and $10,000 next year. Would Rod choose this second option? Why would it be wrong to add together year one earnings and year two earnings in deciding his choice? What must you do instead? Prove which he would prefer. Does his choice depend on anything other than financial considerations?

Reference no: EM131244667

Questions Cloud

Reference to any of the principles of contract law : Do you agree or disagree with the decision in the Lambert case (p. 323, textbook). Explain by making EXPLICIT reference to any of the principles of Contract Law (say which one(s) you are using) that are in the Chapter.

Contrast the two main perspectives on business power : Compare and contrast the two main perspectives on business power in the US economy (dominance and pluralistic) and choose the one more applicable to contemporary US.

How would implementation of marginal cost pricing system : How would implementation of a marginal cost pricing system for water impact total agricultural consumption and total urban consumption of water in California?

Discuss current macroeconomic issues or events : Discussion postings will require you to read about and discuss current macroeconomic issues or events. You should draw material from reputable sources and media outlets.

Draw his budget line including endpoints : In a two year setting Rod has earnings of $8000 this year and earnings of $25,000 next year. He can borrow or lend at an interest rate of 25%. Draw his budget line including endpoints. What is the slope of the budget line? What is the interpretation ..

Extended the copyright protection : In 1988 the U.S. Congress extended the copyright protection to 95 years after the year of original publication for corporations. But copyrights holds for 50 years in Australia and 70 years in the European Union. Discuss how you as the book or music p..

Strategic alliance has become popular in global business : Strategic alliance has become very popular in global business. Discuss one strategic alliance in the healthcare industry. Then briefly describe its background, structure, operation, or challenges.

Determine optimal price both firms should be charging : ABC Firm in Industry Alpha has MC of production = $100 and they know from past experience that their Lerner index is 0.3. XYZ firm in Industry Beta has MC of production = $35 and Lerner index is 0.55. Determine optimal price both firms should be char..

Suppose two goods are produced in the economy : Suppose two goods are produced in the economy: an intermediate good, and a final good. Let E_1 and E_F be total expenditure on the intermediate and final goods, respectively. By the expenditure approach, clearly GDP is equal to E_F, since this is (by..

User Account

All Pages