Dylan has a current income equal to 1,736. The real interest rate is 9%. If Dylan wants to consume the bundle C₁ = C₂ = 2, 720, what should be his income in the next period?
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![Dylan has a current income equal to 1,736. The real interest rate is 9%. If Dylan wants
to consume the bundle C₁ = C₂ = 2, 720, what should be his income in the next
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- Patience has a utility function 1/2 1/2 U(cl, c2) = c? + 0.80c/? where c is her consumption in period 1 and c is her consumption in period 2. Her income in period 1 is 3 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2? a. 2 b. 0.13 c. 0.25 d. 0 е. О.38 20% 13% 25% 0%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)Old Macdonald has a farm. He works 80 hours a week. He can either grow rhubarb or raise chickens. Every hour that he spends growing rhubarb gives him £2 of income this year. Every hour that he spends raising chickens this year will add £4 to his income next year. In fact, next year's weekly income will be 100 + 4H pounds where H is the number of hours he spends raising chickens this year. Old Macdonald's utility function is U(c1, c2) = min{c1, c2} , where ci and c2 are his consumption expenditures this year and next year. Old Macdonald doesn't believe in banks and will neither lend money nor borrow money. i. Explain how Old Macdonald budget line for current and future consumption would look like, identifying key points on it. ii. How many hours a week will he choose to spend raising chickens? How much money will he spend per week on consumption in each year? iii.
- 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).Calculate the value of APC when Consumption is given to be $230 and the income is $500Jien 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
- Suppose you expect to earn $10 this year and $10 next year. Each dollar you earn this year can be either spent, or saved at an interest rate of 10%. If you want to spend more than $10 this year, you can borrow money at 10% interest and repay it next year. Next year, you plan to pay oyour debts (if any), then spend all your earnings and all your savings (if any). Draw your budget line between “dollars spent this year" and “dollars spent next year". Suppose the government imposes a 50% income tax on all your earnings this year and next year (not including your interest earnings). Draw your new budget line. Suppose the government imposes a 50% sales tax on everything you buy this year and next year. Draw your new budget line. Suppose the government imposes a 50% income tax on all your earnings this year and next year, including your interest earnings. Draw your new budget line. True or False: If interest earnings are not subject to income tax, then an income tax and a sales tax…Find the value of saving when the consumption is given as $413 and the income is $511Consumer's utility function for consumption in two periods is c1+30ln(c2). The interest rate is r, the income in the first period is 10, the income in the second period is 50. What is the formula for the demand for second-period consumption?
- check the answer twice4.Suppose Poornima is an avid reader and buys only comic books. Poornima deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a comic book is priced at $15.00. Initially, the purchasing power of Poornima's $3,000 deposit is comic books. For each of the annual inflation rates given in the following table, first determine the new price of a comic book, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Poornima's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest comic book. For example, if you find that the deposit will cover 20.7 comic books, you would round the purchasing power down to 20 comic books under the assumption that Poornima will…