Since she has to borrow and pay interest if she wants to consume in the first period, she can achieve the highest utility by consumingthe smallest amount possible in the first period, thus minimising the amount of income lost as interest.Select one:O TrueO False Consider the diagram:FF (10% interest rate)FF (78% interest rate)Julia's 100endowment3836Julia's IC (higher utility)Julia's ICJulia's IC (through point F)Julia's IC (lower utility)56 58Consumption now (S)3591Consumption later ($)

It is known that: Julia has to borrow to consume in period 1

Since she has to borrow and pay interest if she wants to consume in the first period, she can achieve the highest utility by consuming the smallest amount possible in the first period, thus minimising the amount of income lost as interest. Select one: O True O False

Since she has to borrow and pay interest if she wants to consume in the first period, she can achieve the highest utility by consuming the smallest amount possible in the first period, thus minimising the amount of income lost as interest. Select one: O True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Ronald is an Economics students who likes to spend his leisure time of sixty hours a month doing one…

A: Budget Constraint:A budget constraint refers to the limitation on spending that an individual,…

Q: Thomas has the following utility function over milkshakes (m) and smoothies (S): U (m,s) =m+ 3s…

A: Above question represents perfectly substitutable preferences , and for these kind of preferences…

Q: A consumer faces a tradeoff between labor (L) and leisure (R). She consumes a composite good (C).…

A: Given Hourly Wage = $20 Spend a maximum of 24 hrs on labor and leisure work = 7 hours Leisure = 17…

Q: Seung's utility function is given by U - C^(1/2), where C is consumption and C^(1/2) is the square…

A: The expected utility of any individual is given by: Expected Utility = (probability of loss)(Utility…

Q: Given an individual’s current consumption patterns, we know that the person is consuming in such a…

Q: Melanie inherited $25,000, and she needs to decide how much to spend now and how much to save for…

A: Answer: Correct option: $15,000 Explanation: Melanie income in period 1 = $25,000 Now suppose that…

Q: A consumer has a utility function U(X,Y ) = X1/2 Y1/2 . Prices of the goods are pX = £10 and pY =…

A: Given information: U=X1/2Y1/2 -------------> Utility function. Px = 10----------> price of…

Q: Suppose that the price of T rises by $1 and the price of L falls by $1.25. Can Paula still afford to…

A: As the price of T rises by $1 and as mentioned the price of L reduced by $1.25, it is quite possible…

Q: Given the utility function: U = ln c + l + ln c’ + l’ and the budget constraint:…

A: given utility function: U = ln c + l + ln c’ + l’ budget constraint:…

Q: Suppose that, from an initial individual consumer equilibrium position in the indifference…

A: An indifference curve (IC) is representative of the locus of all combinations of two goods or…

Q: QUESTION 4 Linguini and Colette consume only éclair (x,) and profiterole (x,). Linguini has utility…

A: "Since you have posted multiple sub-part questions, I can only answer the first 3 parts, the rest…

Q: Mika earns $395 per week which she spends entirely at the grocery store, purchasing either food or…

A: Hey champ,Welcome to this platform. Here you will get the answer with better quality in minimum…

Q: Ann consumes two goods, r and y. Her utility function is given by: u(x, y) = (x+1)VJ. The price of a…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Each week, Mary selects the quantity of two goods, X and Y, that she will consume in order to…

A: A budget constraint is a fundamental concept in economics that represents the limits or boundaries…

Q: Answer the question on the basis of the following two schedules, which show the amounts of…

A: "Utility is maximized at a point where the ratio of marginal utility to price of one good equates…

Q: . What will be her total utility from both leisure and income when working 25 hours per week? 2.…

A: Total Utility (TU): - the total utility is the aggregate utility derived by the consumption of a…

Q: Practice sheet: The optimal choice Find the optimal choice for each of the following individuals…

A: # consumer's budget income = 210 ; Px = 2, Py =1 Hence consumer's budget equation would be : =>…

Q: Let's assume that Justin Trudeau, who lives in Ottawa, is purchasing corn (C) and dandelion (D) in…

A: The utility is maximum when both goods are purchased at equal marginal utility per dollar.

Q: Rhea is determining how many gallons of milk (M) and loaves of bread (B) to purchase. Use the…

A: Utility refers to the satisfaction attained by the consumers from the consuming the goods and…

Q: In may and june, Mary spent all her clothing budget on bathing suits and beach bags. Each bathing…

A: Marginal utility describes the additional satisfaction or benefit gained from consuming one more…

Q: Suppose a consumer's utility function is given by U(X,Y)= X¹/²*Y¹/². Also, the consumer has $36 to…

A: Utility maximization problem : With the given prices and the income, a consumer chooses his…

Q: Suppose Carlos has to choose between purchasing jewelry and water. Which of the following is the…

A: Marginal utility is the utility from the next unit consumed of the same good. MU per dollar=MU of…

Q: 3. You have improved your marks this year and your parents are impressed and wish to reward you for…

A: Given utility function = 20XY Utility level to be achieved = 360,000 PX = 50 PY = 10 We have to…

Q: Consider an economy with two periods (interpreted as “when young” and “when old” periods)and two…

A: “Since you have posted multiple questions with multiple sub-parts, we will provide the solution only…

Q: • The price of Coke (Pc) is $0.50/can. • The price of Pepsi (Pp) is $1.00/can. Based on his budget…

A: The utility preferences are perfect substitutes MRS = (dU/dC)/ (dU/dP) MRS = 2/3 relative price…

Q: Q.7 A consumer's utility function is given by the expression: i = (0.6À"s + 0.4y"s). • Determine the…

A: Note- Since, you've asked question with multiple subparts, we'll only solve the first three subpart…

Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Since she has to borrow and pay interest if she wants to consume in the first period, she can achieve the highest utility by consuming
the smallest amount possible in the first period, thus minimising the amount of income lost as interest.
Select one:
O True
O False

Consider the diagram:
FF (10% interest rate)
FF (78% interest rate)
Julia's 100
endowment
38
36
Julia's IC (higher utility)
Julia's IC
Julia's IC (through point F)
Julia's IC (lower utility)
56 58
Consumption now (S)
35
91
Consumption later ($)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Binta always consumes Chick-fil-A chicken with Chocolate Milkshake, she will only have some utility if she consumes them together. If Chick-fil-A lowered the price of their chicken, and Binta change her consumption bundle accordingly. Part of this change is due to income effect and the other part is due to substitution effect. True False
Can you help me answer this macroeconomics theory question
EXERCISE 5 Loise spends £20 on tea (T) and coffee (C). Her preferences for these goods can be described by the following utility function: ( , ). Suppose that one cup of tea costs £1.60 while one cup of Loise’s favourite coffee costs £4.00. Find Loise’s optimal consumption bundle. Provide both algebraic and graphical solution. Explain your reasoning. Discuss how Loise’s optimal consumption choice would change when her disposable budget changes. If the price of tea increases to £2.00 per cup, how should the price of coffee change so that Loise can be as well off as before this change in prices? Discuss the implications of the price change from c) on Loise’s optimal choice. In your discussion, include the analysis of the substitution and income effects as well as Loise’s demand for tea and/or coffee.
could you answer part e please
Anne is going to the grocery store to buy some fruit. She can buy either apples or oranges. Let a be the quantity of apples she buys, and let zo be the quantity of oranges she buys. Her utility function is: u(xa, xo) = ln xa + 3 ln xo Anne has y pounds to spend. The price of apples is pa and the price of oranges is po (a) (b) Write down Anne's budget constraint and utility maximization problem, and the Lagrangian associated with this utility maximization problem. Find Anne's Marshallian demand functions for apples and oranges. Find Anne's indirect utility function.
Uncertain what would be the correct answer
Terry attends college and works part-time in a drug store. She can work up to 40 hours each week and is paid $9 per hour. The following table shows her utility from different levels of leisure and income. Refer to the attached picture for the table. 1. Fill in the Marginal Utility columns above. 2. What will be Terry’s total utility from both leisure and income when working 20 hours per week?
If you had a vacation budget of $3000 to take vacation(s) this fall, use utility analysis theory to predict which vacation that you would participate in this fall. You need to explain why you would take this vacation instead of another one that you were considering. Assume that you must take the vacation or all life on Earth would perish. I made that last assumption to prevent you from saying that you would just spend it to pay down bills or put it in savings. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.