Suppose people can live a maximum of 100 years. Life expectancy in the U.S. is 78 years, and average consumption per-capita is $35,000. In Bolivia life expectancy is 68 years and average per-capita consumption is $3,700. Construct the following measures of welfare: a. Compute relative consumption COL CUS b. Assuming that average per-capita consumption is equal to GNP per-capita, compute an HDI index for both countries. c. Suppose everyone in a country has the same consumption and utility is given by u(c,.a) = [û + +-=-7] ª Compute the Jones-Klenow measure of living standards A for Bolivia. a, with = 0.5, u = 48.1
Suppose people can live a maximum of 100 years. Life expectancy in the U.S. is 78 years, and average consumption per-capita is $35,000. In Bolivia life expectancy is 68 years and average per-capita consumption is $3,700. Construct the following measures of welfare: a. Compute relative consumption COL CUS b. Assuming that average per-capita consumption is equal to GNP per-capita, compute an HDI index for both countries. c. Suppose everyone in a country has the same consumption and utility is given by u(c,.a) = [û + +-=-7] ª Compute the Jones-Klenow measure of living standards A for Bolivia. a, with = 0.5, u = 48.1
Chapter1: Making Economics Decisions
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Transcribed Image Text:Suppose people can live a maximum of 100 years. Life
expectancy in the U.S. is 78 years, and average consumption per-capita is $35,000. In Bolivia life expectancy
is 68 years and average per-capita consumption is $3,700. Construct the following measures of welfare:
a. Compute relative consumption nOL
CUS
b. Assuming that average per-capita consumption is equal to GNP per-capita, compute an HDI index for
both countries.
c. Suppose everyone in a country has the same consumption and utility is given by
1-o
u(c, a) = ū+
with o = 0.5, ū = 48.1
a,
Compute the Jones-Klenow measure of living standards for Bolivia.
d. Which of the three previous measures of welfare would you choose and why?
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