Consider a trader i has following utility function: u;(X1, x2) = xf x¯", where Xi refers to the quantity of asset with price pi, and i = 1,2 in this case. Suppose the total money of this trader to be completely used for trading is M, and during the whole trading process the price of asset remains constant. (a) buy when she wants to maximize her utility function. Determine the optimal quantity x; for each asset that this trader can Describe in words about her preferences correponding to a = 0, a = 1, (b) and a = 0.5.
Q: 3. Consider the following functions for Good X (pieces) per week: Demand Function: Qd = 60 – 2P Supp...
A: Price elasticity of demand is the ratio of the percentage change in quantity demanded of a product t...
Q: From the bank of terms match the letter that corresponds to the appropriate concept/description. Ban...
A: The above terms are related to the various forms of market like perfect competition and monopoly. In...
Q: For each of the following utility functions, compute the marginal utility of good X (MUx) and the ma...
A: Answer: Marginal utility: marginal utility refers to the addition to the total utility when an addit...
Q: Investment 0.30 rate 0.25 0.20 0.15 0.10 0.05 0.05 0.10 0.15 0.20 0.25 0.30 Saving rate 19) Given th...
A: The red straight line is 45° line which shows that at each point on red line both axes value are equ...
Q: 5.9 Share elasticities In the Extensions to Chapter 4 we showed that most empirical work in demand t...
A: a. ∂sx∂I=∂(pxxI)∂I=px(-1I2x+I∂x∂I) The share elasticity is calculated by, ∂sx∂IIsx=px(-1I2x+1I∂x∂I...
Q: An economy, Delta exported goods worth $30 billion and services worth another $10 billion in 2020. ...
A: A country's current account tracks the value of its exports and imports of commodities and services,...
Q: Given f (x, y) = 4x² + 6xy – 5y? - df(x,y) What is dx
A: Here, a function is given as: f(x,y)=4x2+6xy-5y2 To find: df(x,y)/dx
Q: Use Table: National Income Accounts. The value of national savings is: Table 1: National Income Acco...
A: National savings refers to the sum of public savings and private savings.
Q: Mr. JCT is working a company providing 401(k) retirement plan. He contributed $6,000 to the plan thi...
A: To calculate your savings rate, divide your monthly savings by your monthly gross income, then multi...
Q: The framers of the Constitution gave the chief economic power of government to Group of answer choic...
A: Option A is incorrect as the president himself implements laws that are written by Congress. Optio...
Q: If you wanted to increase demand for your restaurant but are unable to lower prices or increase adve...
A: Meaning of Demand: The term demand refers to the willingness of an individual to purchase a partic...
Q: MACROENVIRONMENT ELEMENT Characteristics (Define the given element by identifying its nature, charac...
A: The area of distribution, production, and consumption of goods and services by different agents as a...
Q: In the short run, a rise in the federal funds rate ________ the price level and ________ real GDP. ...
A: In the short run when the federal funds rate increase so investment falls and so does output and emp...
Q: To align personal and corporate goals, firms need to have a strong ethical climate, explicit rules f...
A: In a mane, a firm enters with having some corporate as well as personal goals to operate a business ...
Q: Assume that the following details apply to the U.S. economy: Government budget deficit: $150 ...
A: G - T = Government budget deficit = $150 billion. S = Domestic Savings = $2,000 billion I = Domestic...
Q: The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (s...
A: In Market for Goods and Services, firms sell goods and services and household purchase those goods a...
Q: Figure 8 shows a price-taker firm with demand curve, D, a short run cost curve, AC, and marginal cos...
A: A perfectly competitive firm is a price taker. It means the price is determined by the market forces...
Q: If 9% is deducted from Jacob's annual pay of $1,035 to pay for state taxes, then how much is deducte...
A: State taxes are collected by the state government it is not the part of the central government. Stat...
Q: Which of the following is NOT true of a pure command economy? A. Capital and labor are allocat...
A: An economic system is a way for governments or communities to distribute and organise resources, goo...
Q: A3 in the McCall partial equilibrium model, if unemployed individual can only live for 10 periods. I...
A: Depending on the situation, the discount rate has two alternative meanings and applications. The wo...
Q: In this market, the equilibrium price is s per box, and the equilibrium quantity of oranges is milli...
A: At the equilibrium point, the demand and supply curves intersect each other. In this market, the eq...
Q: Compute the annual equivalent repair cost over a 5 year life if a typewriter is warranted for 2 year...
A: Given: Life=5 years Warranty=2 years Repair cost=$1000 annually i=10%
Q: 1. Calculating inflation using a simple price index Consider a fictional price index, the College St...
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a...
Q: Considering the following statements, which one is true that represents a financial outflow from the...
A: A) Returns paid on U.S. investments in France When the return is paid on U.S investment in France th...
Q: There are four hospitals (consumers in this example) willing to pay the following amounts for a vent...
A: Answer: Surplus: surplus refers to the difference between the cost of producing a good and the maxim...
Q: What changes has the supply and demand of micro chip seen recently and expected for the future? How ...
A: The demand curve shows the association between the amounts of commodity demanded by the consumer at ...
Q: a. Base on the demand and supply functions above, from equilibrium price and quantity, if the price ...
A: DEMAND FUNCTION SHOWS THE FUNCTIONAL RELATIONSHIP BETWEEN QUANTITY DEMANDED FOR A GOOD AND ITS VARI...
Q: In a competitive market, the industry demand and supply curves are P = 70-QD and P = 40+2QS. %3D w. ...
A: We can find the equilibrium price and output, by putting industry demand equal to industry supply.
Q: The price for some intra-Asia container shipping services, such as the container shipping fee for Ch...
A: The quantity of a commodity demanded is the amount that people opt to purchase at a certain price le...
Q: 2. Suppose demand and supply are given by Qdz = 7-P, and Qsz = P - %3D --ice G. Show the existing an...
A: Part c) In the figure below , we have supply and demand which intersects at price 10 which is equili...
Q: Government affects business by being all but one of the following 1. A tax collector 2. An agent 3. ...
A: Government policies describe why things should be done in a given way and in a certain direction. Pu...
Q: The Second Welfare Theorem implies that it is possible to achieve another Pareto optimal outcome wit...
A: In order to maximize welfare, there is a need to maintain efficiency as well as equity within an eco...
Q: Identify the current account balance, financial account balance, and reserve balance? (a) An Ameri...
A: "Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts fo...
Q: Suppose that the economy is characterized by the following behavioral equations: C= 180 + 0.7Y /= 13...
A: Aggregate expenditure is the sum of consumption investment government spending a closed economy.
Q: If the Fed increases the monetary base, the a. federal funds rate rises. b. federal funds rate fall...
A: In the United States, Federal Reserve can use monetary policy to influence the monetary base in the ...
Q: Cost LRAC A Quantity Figure 1 Long run average cost curve for a firm Figure 1 shows a long run avera...
A: We have to find Long run average cost curve.
Q: Use NPV and ERR analyses to determine which of the following two mutually exclusi projects is the be...
A: ANSWER Note: Let us get theory right and go to the math part. The problem is a classic example of ...
Q: In 1938, major powers met in Munich to discuss Germany’s demands to annex part of Czechoslovakia. Le...
A: Given information 2 countries Allies and Germany Allies has 2 strategy compromise and fight Germany ...
Q: See the income and benefits information for a wage earner in an antipoverty program with a phased-ou...
A: Answer-
Q: Republic of Bankland has three banks in the economy. The governor of the central bank of the Republi...
A: The total amount of money held by the public at any given moment in an economy is referred to as the...
Q: Find a recent practical article online that describes a real-world example regarding "Federal funds ...
A: Reference article : www.britannica.com/topic/federal-funds-rate The federal funds rate is the intere...
Q: what is the purpose and functions of inside money transfer?
A: In Democratic government system typically, it has been observed that there is both public and privat...
Q: QUESTION 32 Positive economic analysis a. involves judgments on how resources should be used in an e...
A: The answer is - c. involves how resources are actually used in an economy.
Q: Nominal Interest Rate Inflation Rate Year (Percent) (Percent) 2004 1.6 2.7 2005 3.4 3.4 2006 4.8 3.2...
A:
Q: 6. Limitations of GDP Although GDP is a reasonably good measure of a nation's output, it does not ne...
A: GDP measures the market value of final goods and services produced in the economy within a given per...
Q: The following table shows the composition of GDP in 2015 for a hypothetical country. Complete the ta...
A: The gross domestic product (GDP) is the total market value of goods and services produced by a count...
Q: n Game 1 below, the US and Iran are bargaining over the state of Iran’s nuclear program. The US must...
A: Players : { US, Iran} Strategy US= { PC BD, PC AS, PS BD, PS AS} Strategy Iran= {AC BD, NE BD, AC RE...
Q: The price index was 140 in one year and 148.4 in the next year. What was the inflation rate? 8.4 per...
A: Inflation is the consistent rise in general price level over period of time . And inflation reduce ...
Q: Suppose that the demand in a particular industry is given by Qd = 100 - 2P. When the market price in...
A: Introduction: Demand is defined as the number of customers that are willing and able to purchase thi...
Q: What is an economic appraisal and what does it encompasses? List out the steps in carrying out an ec...
A: Economic appraisal, also known as 'appraisal,' is the process of getting the most out of government ...
Step by step
Solved in 2 steps
- Suppose Jimi has reference dependent preferences over guitars and money as in Tversky and Kahneman (1991). His utility functions are given below. Gains Gains 400 -2 -2 2 Guitars 2$ Losses Losses i-600 -2 What is the least amount of money Jimi is willing to accept to sell one of his guitars? (just enter a dollar amount, i.e., "10o0", not "$1000"An agent has income m that can be spent on frequent flier miles f or on other goods – a “composite good” g. Their respective prices are: pf = 10 per mile and pg = 1 per unit. The flier miles have a stepwise price schedule. After the first 25 miles the price is reduced by 20% and after 50 miles the price is further reduced by another 50%.1. Put g on the vertical axis and f on the horizontal axis. Assume m = 200, and draw the budget constraint with all the intercepts and appropriate slopes. 2. On a separate graph, repeat part (1) for m = 300. 3. On a separate graph, repeat part (1) for m = 600.Joanna is playing blackjack for real money. She has reference-dependent preferences overmoney: if her earnings are m and her reference point is r, then her utility is v(m − r), wherethe value function v satisfies v(x) = √x for x ≥ 0, and v(x) = −2√−x for x ≤ 0a) Graph Joanna’s utility function as a function of m − rb) Does Joanna’s utility function satisfy loss aversion? Does it satisfy diminishingsensitivity?Suppose that Joanna has linear probability weights (that is, she does NOT have prospecttheory’s non-linear probability weighting function). Hence, if she has a fifty-fifty chance ofgetting amounts m and m′, and her reference point is r, her expected utility is1/2v(m − r) + 1/2v(m′− r) (2)For parts (c), (d), and (e), assume that Joanna’s reference point is $0 (that is, no winsor losses) and answer the following questions for each part: (i) What is the g for whichJoanna would be indifferent between not gambling and taking fifty-fifty win $g or lose$4 gamble? (ii) Does this reflect…
- Answer the following questions using the following information. Columns 1 and 2 in the table below show the marginal utility that Cody gets by purchasing products A and B. Column 3 shows the marginal utility Cody gets from saving Assume that the price of A is $13 the price of B is $10, and Cody has an income of $129. a) Find the following series of MU/$ for each column. Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least two decimal places Column 1 Column 2 Column 3 Units of A MU MU/S Units of B MU MU/$ Number of $ saved MU MU/S 68 6.8 1 80 6.15 1. 13 0. 2 71 5.46 2 63 6.3 2 10 0. 3 66 5.08 3 56 5.6 3 7 4 61 4.69 4. 46 46 0. 54 4.15 40 4 45 3.46 31 3.1 6. 1 39 3 22 2.2 0. 29 2.23 8 17 1.7 8 b) What quantities of A and B will Cody purchase in maximizing his utility? Quantity of A: 0 Quantity of B: 0 c) How many dollars will Cody save? Dollars Saved = $0 SAVE AND CLOSELet vij be bidder i's valuation for object j, where i in {1,2,3} and j in {1,2}. Bidder i knows its valuation vi; but other bidders only know that vi; is drawn uniformly from [0, 100]. If bidder i wins object 1 at price p1 and object 2 at price p2, bidder i's payoff is v;1 If bidder i wins only object j at price p;, his payoff is vij – Pj. If bidder i does not win any object, his payoff is 0. The auction proceeds as follows. The initial prices are zero for both objects. All bidders sit in front of their computers and observe the prices for both items in real-time. Initially, all bidders are invited to enter the bidding race for both items. At any moment in time, each bidder has the option to withdraw from the bidding race for either object or both. If a bidder withdraws from the bidding for one object, he can no longer get back to the bidding for that object, but he can stay in the bidding race for the other object if he hasn't withdrawn from it previously. The price for an object…Let vij be bidder i's valuation for object j, where i in {1,2,3} and j in {1,2}. Bidder i knows its valuation vi; but other bidders only know that vi; is drawn uniformly from [0, 100]. If bidder i wins object 1 at price p1 and object 2 at price p2, bidder i's payoff is v;1 If bidder i wins only object j at price p;, his payoff is vij – Pj. If bidder i does not win any object, his payoff is 0. The auction proceeds as follows. The initial prices are zero for both objects. All bidders sit in front of their computers and observe the prices for both items in real-time. Initially, all bidders are invited to enter the bidding race for both items. At any moment in time, each bidder has the option to withdraw from the bidding race for either object or both. If a bidder withdraws from the bidding for one object, he can no longer get back to the bidding for that object, but he can stay in the bidding race for the other object if he hasn't withdrawn from it previously. The price for an object…
- 2. Consider a product market with a supply function Q = Bo + Bị Pi + u, a demand function Q = Yo + u, and a market equilibrium condition Q = Q, where u and u are mutually independent i.i.d. random variables, both with a mean of zero. You have a data set of (P, Qi) in equilibrium. a. Show that P; and u are correlated. b. Show that the OLS estimator for 31 is inconsistent.2. Find Hicksian demand by duality for utility function: u(x1,x2) = 2/x1 + 4/x25. Consider Paola willingness to pay to obtain a specific good and her willingness to accept to trade the same good. Let her utility function be given by 0.5 0.5 u(x, x) = x+x5. a) Briefly explain why the willingness to pay and the willingness to accept for the same person over the same good may diverge. b) Assume that her wealth is given by w = P2 = 2, so that x = 100, if the demand for good 1 is zero. Derive the maximum willingness to pay and the minimum willingness to accept for 25 units of good 1, and identify which measure of value is larger? 200 , and the price of good 2 is defined as c) How does your answer change if instead we considered only 1 unit of good 1? d) Under which scenario are the measures of value almost the same? Accurately motivate your answer.
- 5.3 (0) Ambrose, the nut and berry consumer, has a utility function U(21,x2) = 4/T +x2, where ¤; is his consumption of nuts and r2 is his consumption of berries. %3D (a) The commodity bundle (25,0) gives Ambrose a utility of 20. Other points that give him the same utility are (16, 4), (9, ), (4, - ), (1, –), and (0, ). Plot these points on the axes below and draw a red indifference curve through them. (b) Suppose that the price of a unit of nuts is 1, the price of a unit of berries is 2, and Ambrose's income is 24. Draw Ambrose's budget line with blue ink. How many units of nuts does he choose to buy? (c) How many units of berries? (d) Find some points on the indifference curve that gives him a utility of 25 and sketch this indifference curve (in red). (e) Now suppose that the prices are as before, but Ambrose's income is 34. Draw his new budget line (with pencil). How many units of nuts will he choose? How many units of berries?a) You are given a utility function described as:U= U(K, L, M) = 10LogK + SLogL. + 2LogMWhere K, L and M are goods consumed. The individual has K100 to spend on the threeitems. Furthermore, you are informed that monthly salary is $500 and the prices of K, Land M are $2, $10 and $4 respectively. Calculate the consumer's optimal bundle.D.b) Provided a demand curve for Beans is as followsO = 4000 - 255PWhere Q is the quantity demanded and P is the price. Find the elasticity at K7, K10 and K15.Suppose that an agent is offered money: she can choose any dollar amount upto $M. We see that she chooses C(0, 1, ., M}) = {M}. Show by example that this choice can be explain equally well by (i) utility maximization with diminishing marginal utility for money, and (ii) utility maximization with increasing marginal utility for money. ....