consumption today, c2 her consumption tomorrow, m₁ her income today, and m2 her income tomorrow. Her preferences over (C1, C2) can be represented by the utility function u(c1, c2). She can save at rate rs and borrow at rate rB. In each of the following situations, determine whether she will save, borrow, or do neither, and provide a brief explanation. 144, and rs = гB = 0.2. (a) u(c1, c2) = c1c2, m₁ = 100, m2 = (b) u(c1, c2) = ln(c₁) + 2 ln(c2), m₁ = (c) u(c1, c2)=√√c₁+0.9√√√c2, m₁ = 100, m2 = 100, m2 = 200, rs = 0.1, and rp = 0.15. 100, rs = 0.1, and rp = 0.15.

2. Ann has started working and is saving to buy a house, which requires a down-payment of d. She has a monthly income of y and faces goods prices pa and p3. Ann's utility function is given by u = 3 In a. + (1- 3) In a. %3D Her minimum standard of living renders a utility of uo. Solve for the minimum number of months it takes for Ann to save up to the down-payment, as a function of (d, y, uo, Pa, Ps).

Help me

6. A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: ule1, c2) = cfc, where c, = consumption in period t and a+ B = 1. Her income in period one is I1 = 500 and I2 = 400, and she can lend or borrow at interest rate r = 0.2. (a) Find the optimal consumption demand. (b) What values of a, if any, makes the consumer a borrower? Interpret this result. (c) Suppose now that a = but that r is no longer 0.2. What values of r, if any, makes the consumer a borrower? Interpret this result.

Seung's utility function is given by U - C^(1/2), where C is consumption and C^(1/2) is the square root of consumption. She makes $50,625 per year and enjoys jumping out of airplanes. There's a 5% chance that in the next year, she will break both legs, incur medical costs of $30,000, and lose an additional $5,000 from missing work. a. What is Seung's expected utility without insurance? b. Suppose Seung can buy insurance that will cover the medical expenses but not the forgone part of her salary. How much would an actuarially fair policy cost, and what is the expected utility if she buys it? Policy cost: $___ Expected utility: ___ c. Suppose Seung can buy insurance that will cover her medical expenses and foregone salary. How much would such a policy cost if it's actuarially fair, and what is her expected utility if she buys it? Policy cost: $___ Expected Utility: ___

Kenji is buying salad and pizza for a company lunch. Suppose that a bowl of salad costs $3.00, and a slice of pizza costs $4.00. Let E be the amount in dollars that Kenji spends on salad and pizza. If Kenji buys S bowls of salad and P slices of pizza, then the total amount of money he spends (E) can be represented by the equation Now rearrange the equation you wrote above so that P is written in terms of E and S. The quantity of pizza he buys can be represented by the equation Suppose Kenji has $48.00 to spend on salad and pizza; that is, E= $48.00. Complete the following table with the values of S or P that make the equation true. Hint: To complete the first row, determine the number of pizza slices Kenji can purchase with $48.00, when the number of salad bowls he purchases is 0. Pizza Budget Salad (Dollars) (Bowls) (Slices) 48.00 0 48.00 48.00 8 0

Tim is buying pizza and salad for a company lunch. Suppose that a slice of pizza costs $4.00, and a bowl of salad costs $5.00. Let ♬ be the amount in dollars that Tim spends on pizza and salad. If Tim buys P slices of pizza and S bowls of salad, then the total amount of money he spends (B) can be represented by the equation Now rearrange the equation you wrote above so that S is written in terms of E and P. The quantity of salad he buys can be represented by the equation Suppose Tim has $40.00 to spend on pizza and salad; that is, E = $40.00. Complete the following table with the values of P or S that make the equation true. Hint: To complete the first row, determine the number of salad bowls Tim can purchase with $40.00, when the number of pizza slices he purchases is 0. Budget Pizza (Dollars) (Slices) 40.00 0 40.00 5 40.00 Use the black line (plus symbols) to plot the line illustrating the combinations of pizza and salad that Tim can purchase with a budget of $40.00. SALAD (Bowis) 14…

Use the black line (plus symbols) to plot the line illustrating the combinations of salad and pizza that Andrew can purchase with a budget of $30.00. PIZZA (Slices) 14 12 10 00 4 2 O to 0 2 4 8 8 SALAD (Bowls) 10 12 14 Initial Budget New Budget ? Now suppose Andrew's income is cut in half: That is, he has 50% less money to spend than he did before. On the previous graph, use the blue line (circle symbols) to plot Andrew's new budget constraint. Which of the following statements best summarizes the pattern of causality captured by the graph above? Check all that apply. The relationship between S and P is not a causal relationship. A change in E causes a shift of the budget constraint. A change in S causes a change in P. A change in P causes a change in S.

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.

Clare is contemplating her possible consumption patter for this year and next. She know that she will have income of $50,000 this year and $55,000 next yea. Her plan is to consume $40,000 this year (t=0). She is also going to invest 30,000. This investment has a positive NPV of $450. She decides to take the investment; in addition, the return on the investment is 9.62%. What consumption she can expect at t=1? (show a detailed procedure)