Alice's discretionary income grows by $1,000, of which she spends $600. b.)Alice's MPS is 0.4, and she saves $400 as a result. d) MPC's power consumption is 0.6 and she uses $400. c) MPS is 0.4, saving her $600. a) MPC is 0.4, which saves her $400.
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Alice's discretionary income grows by $1,000, of which she spends $600.
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- DEFINE Limit of consumption optionsYou have an income of $100,000. You can buy an electric car (which costs $60,000) or an internal- combustion car (which costs $30,000). The electric car has a lower mileage than an internal-combustion car: it costs you $1/km if you drive an electric car, but it costs you $2/km if you drive an internal- combustion car. You enjoy driving (measured in kilometers driven) and spending on other goods ( measured in dollars). Draw your budget line (in a diagram measuring all other goods on the vertical axis) if you buy an electric car. What is its slope and what is the economic meaning of its value?This is Ben’s budget. Use his budget to determine the answer to the following questions: 1. Calculate Ben’s total amount of monthly expenses. 2. Calculate Ben’s total net income. 3. What would you recommend Ben do regarding his budget so that he is not in the red? 4. Scenario: Suppose Ben wants to buy a house for $251,599. Calculate his 20% down payment for this home. 5. Scenario: Suppose Ben wants to buy a house for $251,599. For a 15-year mortgage, Ben gets a 4% interest rate. Calculate his monthly payments for this 15-year mortgage. 6. Scenario: Suppose Ben wants to buy a house for $251,599. For a 30-year mortgage, Ben gets a 5% interest rate. Calculate his monthly payments for this 30-year mortgage.
- Find income if consumption is $310 and APC is 0.33Find consumption if income is $300 and APC is 0.43Faa's utility function for coffee (good X) and muffins (good Y) is given as U(x,y) = x0.by0.5. If she has $192 budget to spend on coffee on muffins. And the price of coffee is $8.00 (Px = 8), and the price of muffin is $16.00 (Py = 16). If coffee (good X) is graph on the horizontal axis and muffins (good Y) on the vertical axis. Faa's utility-maximizing consumption of coffee is and muffin is .(Please input your answers in numerical values only without any decimal place or comma). Faa is offered a job in another city. Due to the high cost of living in that city, she is offered an income allowance of $8 to add to her coffee and muffin budget, the prices in the new city she's offered the job are $10.00 per cup of coffee and $20.00 for a muffin. Faa's optimal consumption of coffee will be and muffin will be if she moved to take the job. (Please input your answers in numerical values only without any decimal place or comma). Should Faa take the offer? (hint: consider Faa's utility in her…
- Max is very peculiar about his morning coffee routine. He likes to use exactly two spoons of coffee for every six ounces of water. This give him the following utility function: U = min(2Water, 6Cof fee), where Water (W) is measured in fluid ounces and Coffee (C) in spoons. (a) afford while utility-maximizing? How many spoons of coffee does he use in doing so? (b) If he spends exactly $2 on coffee every morning, how many 8 ounce cups of coffee can he How much utility does Max get from his morning cup/s of coffee?A consumer has the following utility function: U(X,Y)= 400X2/5Y3/5 Suppose that the price of a spa day (x) is £200 and the price of a city break (y) is £300 Find the number of spa days and city breaks that minimise expenditure if 12,800 units of utility are obtained. Also calculate the consumer's minimised expenditureYour own a chocolate producing company which can advertise on both television (T) and internet(I). The effect of TV and online commercials on sales is again given byS(T,I) = 500 + 48T−6T2+ 112I−6I2+ 4TI. You have a budget of $25 that you can spend on T and I. The price of aTV commercial is $12per unit and the price of an online commercial is also $12 per unit. 1. Determine the optimal level of TV commercials T and online commercials I if you have to spend all of your budget. You should provide two methods to solve this, by direct substitution and by setting up the Lagrangian. Is the Lagrange multiplier positive or negative? Give an intuitive interpretation of why this is the case? 2. Now determine the optimal level of TV commercials T and online commercials I if you DO NOT have to spend all of your budget. Do you obtain the same answer as subquestion 5.1? What is the Lagrange multiplier equal to in this case? Discuss.
- A consumer is maximising her utility function: U(r. y) = (r05 +y0.5)2, subject to the budget constraint 4x + 2y = 108. (a) Set up the Lagrangian function of this utility maximisation problem and first-order conditions. (b) What are the utility maximizing amounts of x and y? Also, calculate the multiplier. (c) What are the utility maximising amounts of x and y if the budget constrain to x+ 2y = 36? How would change? Explain your reasoning. (Hint: Yc need to calculate A, rather comment on how it would change and why.)Question 1 Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are: PF = $5 and PC = $20. (a) The maximum amount of food that Maria can consume is _____. (b) The maximum number of pieces of clothing that Maria can consume is ____. (c) Therefore the intercepts of Maria’s budget line are _____ F and _____ C. (d) Graph Maria’s budget line, with F on the vertical axis and C on the horizontal axis. (e) Maria (can, cannot) __________ afford to buy a combination of 200 F and 60 C because this combination of goods is located (outside, inside, on) __________ her budget line. (f) The slope of this budget line is _________. (g) The opportunity cost of one piece of clothing is ___ units of food. h) If Maria’s income rises to $3,000, the new intercepts of her budget line are _____ F and _____ C. (i) Graph this new budget line on your graph for item (d) above.Question 1 Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are: PF = $5 and PC = $20. (a) The maximum amount of food that Maria can consume is _____. (b) The maximum number of pieces of clothing that Maria can consume is ____. (c) Therefore the intercepts of Maria’s budget line are _____ F and _____ C. (d) Graph Maria’s budget line, with F on the vertical axis and C on the horizontal axis. (e) Maria (can, cannot) __________ afford to buy a combination of 200 F and 60 C because this combination of goods is located (outside, inside, on) __________ her budget line. (f) The slope of this budget line is _________. (g) The opportunity cost of one piece of clothing is ___ units of food. h) If Maria’s income rises to $3,000, the new intercepts of her budget line are _____ F and _____ C. (i) Graph this new budget line on your graph for item (d) above.Question 1 Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit…