1. Which of the following represents the household's lifetime budget constraint?a. q +a₂ = 1b. c₂ = 1/₂+(1+m₂)a₂c₁+c₂/(1+₂) = 1 +32/(1+12)d. U = Inc + Blnc₂2. Which of the following are choice variables of the household?a. Ylb. y2C₁d. 123. If the household can borrow and lend, an increase in y₁ causes which of the following toincrease?a. C1C2c. 92d. all of the above4. For a household that can borrow and lend, the horizontal intercept of a sketch of the lifetimebudget constraint isa. Y1by₁+1y21+12c. Y2d. (1+12)y1+y25. Suppose a household can borrow and lend in a perfectly competitive credit market. AssumeB=0.2 and r2 = 0.10. The value for the optimal choice of a2 when y₁ = 10 and y2 = 0 isa. 1.67b. 0.00c. -5.91(d)-7.58

A household's lifetime budget constraint represents the relationship between the present value of…

1. Which of the following represents the household's lifetime budget constraint? a. q + a₂ = 1 b. c₂ = 3/2 + (1+₂)a₂ q₁ +c₂/(1+₂)=31 +32/(1+₂) d. U = Inc + Blnc₂ 2. Which of the following are choice variables of the household? a. y b. 32 9 d. 12 3. If the household can borrow and lend, an increase in y₁ causes which of the following to increase? a. C1 b C2 c. 92 d. all of the above

1. Which of the following represents the household's lifetime budget constraint? a. q + a₂ = 1 b. c₂ = 3/2 + (1+₂)a₂ q₁ +c₂/(1+₂)=31 +32/(1+₂) d. U = Inc + Blnc₂ 2. Which of the following are choice variables of the household? a. y b. 32 9 d. 12 3. If the household can borrow and lend, an increase in y₁ causes which of the following to increase? a. C1 b C2 c. 92 d. all of the above

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 11PA

See similar textbooks

Similar questions

Jien is just bored all the time; no amount of success makes him happy, it seems. Below is a list of his income for the last several years and the utility he experienced per dollar of income: Year Yearly Income Utility per Dollar Earned 2017 $60,000 2 utils 2018 $70,000 1.8 2019 $100,000 1.5 2020 $120,000 1 2021 $145,000 0.40 From the above, we can say that Jien most likely is different from most people economists study in terms of risk attitudes is "risk loving" will not take a fair bet has a utility of wealth curve that is a straight line
Please help with #8 and #9 thank you
Question 2 David spends his budget on chocolate and chip. His utility function is given by ?(?1,?2)= 2?1?2, where ?1 is the number of chocolates he consumers per week, and ?2 is the number of chips he buys per week. A chocolate costs 10 SEK, and a chip costs 20 SEK. David’s weekly budge for consuming on these two goods is 120 SEK. (1) What is David’s budge line? Draw the budget line on a graph with chocolate amounts on the horizontal axis and chip amounts on the vertical axis. Write explicitly at which points budget line crosses the axis. (2) What is David’s marginal utilities for the two goods, respectively? What is his marginal rate of substitution between the two goods? (3) What is David’s optimal choice? Calculate the numerical answer for the optimal bundle. Also draw an indifference curve for David on the same graph as question(1) and show the optimal bundle.
A consumer has income of 15000. Masks costs $35 per mask, and sanitizers cost $70 per bottle. Draw the comsumer's budget constraint ( put mask on the horizontal axis). what is the slope of this budget constraint?
Daniel and Kjell are writing a paper together. Daniel is the PhD supervisor and thus is the first to decide how many hours, hp. to put into the project. After observing the amount of time that Daniel contributes, Kjell decides how many hours, hK. to contribute. Daniel's utility function is 12(hp+ hx)5 -hp Kjell's utility function is 14(hp+hx)0.-hx How many hours does Kjell spend on the project? Select one alternative: O 49 O 26 O 32
Mega Partner is selling two products Marker(m) and Eraser(e) and their budget is given with thefollowing equation: 15Qe+ 30Qm= 3000. Now answer the following questions. I. Draw the budget line for Mega PartnerII. What would be the highest amount spend on Marker with the existing budgetIII. If Total budget increases to 4500 what would be the new budget line (use diagram)IV. If Price of the Marker becomes 15, how this changes the existing budget line keeping allthe values remain same.
Digital Apps per Period 0 1 2 3 4 5 Total Utility of Digital Apps per Period (utils) which 0 50.0 95.0 135.0 171.5 200.0 Marginal Utility (utils) 50.0 45.0 40.0 36.5 28.5 Marginal Utility Portable per Dollars Spent Power Banks (price = $5.97) per Period | 8.4 7.5 6.7 6.1 4.8 0 1 GTA W N 3 4 5 Total Utility of Portable Power Banks per Period (utils) 0 25 47 65 80 89 Marginal Utility (utils) 25 22 18 15 9 Marginal Utility per Dollars Spent (price = $2.70) 9.3 8.1 6.7 5.6 3.3 Consider the table above. Suppose the consumer's income is $26. Does the consumer spend all of her income if she purchases the optimal quantities of digital apps and portable power banks? The optimum quantity of digital apps purchased is and the optimum quantity of portable power banks purchased is. (Enter your responses as whole numbers.) Spending on digital apps is $ and spending on portable power banks is $. (Enter your responses rounded to one decimal place.) Thus, total spending at the consumer optimum is $ the…
EXERCISE 7 Aisha is considering how to allocate the next 6 hours of her free time. She could choose between leisure (L) and helping her neighbour with the house chores. If she decides to help her neighbour, she is going to get paid at £25 per hour, which she can then spend on her favourite pizza (P). Suppose the price of pizza is £12.50. Aisha's preferences for leisure and pizza are given by the following utility function: U(L, P) = 3L + P. (MU₁ = 3, MUp = 1). a) Write down Aisha's budget equation and draw the corresponding budget line. Clearly label the axes and calculate the coordinates of the points of intersection of the budget line with each axis. b) Calculate Aisha's marginal rate of substitution between leisure and pizza. Explain the concept of MRS and interpret the figure obtained. c) Find Aisha's optimal consumption bundle, both algebraically and graphically. Explain your reasoning. d) Would Aisha's optimal choice change if she could get a discount on her pizza purchases so…
You have $3,000 to spend on entertainment this year (lucky you!). The price of a day trip (T) is $40 and the price of a pizza and a movie (M) is $20. Suppose that your utility function is U(TM) T1/3M2/3. a. What combination of T and M will you choose? b. Suppose that the price of day trips rises to $50. How will this change your decision?
Consider an economy with two goods, consumption c and leisure 1, and a representative consumer. The consumer is endowed with 24 hours of time in a day. A consumer's daily leisure hours are equal to 1 = 24-h where h is the number of hours a day the consumer chooses to work. The price of consumption p is equal to 1 and the consumer's hourly wage is w. The consumer faces an ad valorem tax on their earnings of 7 percent. The con- sumer also receives some exogenous income Y that does not depend on how many hours she works (e.g. an inheritance). The consumer's preferences over consumption and hours of work can be represented by the utility function U(c, h) = c-3h¹+, where 3 > 0 and p > 0 are parameters. 1+p
DEFINE Limit of consumption options
Write down the equation for the budget constraint and then graph it for .. Px = $100 Py = $25 Income = $5,000.00