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Consider the inter-temporal model of consumption of a household who has a first period income of 300 and a second year income of 330. The interest rate is 10%. The household saves 100 in period one.
a) Write the budget constraint of period one and the budget constraint of period two and the inter-temporal budget constraint
b) Graph the household budget line and show its equilibrium point.
c) Discuss and show graphically the income and substitution effect and what the equilibrium could be if the interest rate decreases.
Consider the inter-temporal model of consumption of a household who has a first period income of 200 and receives a gift of 100 in period one. In period two his income is of 220 and he leaves a bequest of 55. The interest rate is 10%. The household borrows 50 in period one.
c) Discuss and show graphically the income and substitution effects and what the equilibrium could be if the interest rate increased.
At the end of each year, a worker invests $2,000 into an account the draws 4% interest. The worker makes every payment for the next 30 years except for the payment at the end of year 10. That is, no money is invested at the end of year 10. How muc..
There is a belief that a person's performance on the GMAT (entrance exam to get into graduate school) can be predicted by their undergraduate GPA. Based on regression analysis what are the following values, (Round to three decimal places; put it ..
An economic bad is something you don't want to consume, i.e. less bad is better. Define an economic bad mathematically and name one economic bad in reality. Suppose you had to consume a certain amount of a given economic bad but could pay to get r..
Data for the market for graham crackers is shown below. Calculate the elasticity of demand between the following prices.Price of crackers Quantity Demanded (per month)$3 80 $2.5 120
Construct a graph showing supply and demand in the electronic dog feeder market, using Microsoft Excel. How are the laws of supply and demand illustrated in this graph Explain your answers. What is the equilibrium price and quantity in this market As..
How much consumer surplus do consumers receive when Px = $45? c. How much consumer surplus do consumers receive when Px = $30? The demand curve for product X is given by QXd = 360 - 2PX.
TP TFC TVC 0 $45 $01 45 170 2 45 320 3 45 450 4 45 620 5 45 800 6 45 ..
Assume that nominal income is $35,000 and the price index is 1.20 in year 1. In year 2, nominal income rises to $38,000 and the price index rises to 1.25. What was the percentage change in real income from year 1 to year 2? Make your calculations ..
Now.suppose the monopolist has a total cost curve given by TC+16+4Q2(fixed costs are at original level but variable costs changed). Find the monopolist's profit-maximizing quantity and price.How much economic profit does the monopolist earn d)Inte..
What is the optimal price of the textbook from the author's point of view and by how much would the demand for the textbook change if advertising were increased by 2%?
Moorea spends all of her income on Mochi Frozen Yogurt which costs $1 per cup. She makes $400 per month but lives in a bad neighborhood and is robbed of half her money 20% of the time. Assume YN and YR represent her consumption of yogurt in cups..
The supply curve for product X is given by QXS = -340 + 10PX . a. Find the inverse supply curve. P = + Q b. How much surplus do producers receive when Qx = 350? When Qx = 1,000?
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