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Mandy Marguerita lives two periods. Her initial accumulated wealth (W) in period 1 (inherited from Mom) is $ 20, and her income in period 1 is $ 90. Her income in period 2 is $ 110. Mandy does not leave bequests to her children (couple of deadbeats) when she dies at the end of period 2. The real interest rate is 10% per period. Mandy would like to smooth consumption completely. That is, she wants to have the same level of consumption in both period 1 and period 2. (a) Compute MandyÆs total sources of funds in terms of their value in period 1. Remember to include W. (b) Write the equation for MandyÆs lifetime budget constraint, and graph the budget line. For the following question, Mandy does not consume out of W in period 1. She lets it grow at the stated interest rate. (c) How much will Mandy save and consume in period 1? (d) How will MandyÆs saving and consumption in period 1 be affected by an increase of period 1 real income by $ 11? (e) How will MandyÆs saving and consumption in period 1 be affected by an increase of period 2 real income by $ 11? (f) How will MandyÆs saving and consumption in period 1 be affected by an increase of initial real wealth in period 1 by $ 11?
Machine X has an initial cost of dollar 10,000, annual maintenance of dollar 500 per year, and no salvage value at the end of its 4-year useful life. Machine Y costs dollar 20,000. The last year there is no maintenance cost. The second year, maintena..
This problem asks you to evaluate the e?ects of trade versus integration in a HOS model. There are two goods, food and clothing. Food and Clothing are made using capital and labor. What is the relative price of clothing in the integrated economy? How..
Suppose you are in charge of a toll bridge that costs essentially nothing to operate. The demand for bridge crossings Q is given by P= 15 - 0.5Q. How many people would cross the bridge if there were no toll? What is the loss of consumer surplus assoc..
One of the limitations of Five Forces is that: Industries with high barriers to entry. Low cost strategies are usually found in industries where. Cigarettes - Price Elasticity of demand = - 0.67
Consider a labor market where the demand for a particular category of labor is given by the equation LD = 20 – 2W. Suppose that the supply curve of workers in this market who are also native-born citizens is given by LN = 2W, while the supply curve o..
St Atanagio is a remote island in the Atlantic. The inhabitants grow corn and breed poultry. The accompanying table shows the maximum annual output combinations of corn and poultry that can be produced. Obviously, given their limited resources and..
There are three retirement plans under development. Each plan has a 6% compounded monthly and you cannot take a withdrawal until year 20. One plan requires a payment of X/year for the next 10 years. The other requires a payment of $200 each year from..
q.the market for pizza has the following demand and supply schedules supplied of price quantity and demanded quantity4
Identify atleast 4 key points of a relevant economic article . Write a 3-4 page paper, analyze dynamics of supply and demand to anticipate market equilibrium. Analyze elasticity of demand and supply and its importance and the effect of taxes or other..
You live in a small town with basic medical care facilities and a couple of general practitioner physicians. One of the physicians has said that your cousin needs to be seen by a specialist. However, the nearest specialist is 3000 miles away, on the ..
What typically happens to the ‘real’ risk-free interest rate as the economy weakens, and what typically happens to it when it gets stronger? How would you explain these general tendencies?
LED light bulbs use only 20 to 25 percent of the energy used by traditional incandescent bulbs. Even if all consumers replace their old bulbs by the LED bulbs, do we expect that the arrival of LED light bulbs will decrease energy consumption for ligh..
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