Suppose that there are T periods to maximize over. Show that the intertemporal budget constraint is Yt+1 Ct+1 Ct+2 (1+r) (1+r)² (1+r) Ct + + +...+ Ct+T+1 T+11 (1+r) = Yt + + Yt+2 Yt+T+1 (1+r)² (1+r)ª 2+...+
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![Suppose that there are T periods to maximize over. Show that the intertemporal budget constraint is
Ct+2
Yt+2
Yt+1
(1+r) (1+r)²
(1 + r)²
Ct +
Ct+1
(1 + r)
+
2+...+
Ct+T+1
(1+r)²
\ T = Yt +
+
+...+
Yt+T+1
(1+r)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7810ab07-6748-4d32-b0d1-a5d0d459c5f8%2Fd7dab187-9c7b-42d0-83e4-cf165347db86%2Fsohgcro_processed.png&w=3840&q=75)
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- Mega Partner is selling two products Marker(m) and Eraser(e) and their budget is given with thefollowing equation: 15Qe+ 30Qm= 3000. Now answer the following questions. I. Draw the budget line for Mega PartnerII. What would be the highest amount spend on Marker with the existing budgetIII. If Total budget increases to 4500 what would be the new budget line (use diagram)IV. If Price of the Marker becomes 15, how this changes the existing budget line keeping allthe values remain same.3) Marco has $100 worth of grain in period 1 but gets no grain in period 2. Marco has two choices. He can store the grain that he does not consume in period 1. This results in a loss of 20% of the grain due to pests. Assume that with this option he will choose to consume 68 units of grain in period 1 and 26 units in period 2. Instead, Marco can sell the grain he does not consume in period 1 and lend the money from that sale to someone today at an interest rate of 10%. He can then use the repayment of that loan to buy gain in period 2. a) Based on this information, draw a diagram that outlines Marco's choices. Is he definitely better off once the opportunity to lend is available to him? b) Relative to his initial equilibrium point, does he unambiguously consume more in both periods once he can lend out the excess he does not consume in period 1? c) Now assume that Marco can sell any excess grain he doesn't consume in period 1 and invest the money he gets in a new type of risky activity.…no chagpt answer urgent. The marginal rate of substitution of current consumption for future consumption is A) the slope of the indifference curve. B) minus the slope of the difference curve. C) the downward slope of the budget constraint. D) the endowment point. E) the slope of the lifetime budget constraint.
- I need help soon as possible I have hour and half to finish please.Also calculate monthly budget. Thanks!. On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according to thefunctionU (c, b) = 20c - c2 +18b- 3b2.How many cigars and glasses of brandy does he consume during an evening? (Cost is no objectto J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum of glasses ofbrandy and cigars consumed to 5. How many glasses of brandy and cigars will he consumeunder these circumstances?
- I am extremely confused as to what this question is asking. He has a budget that could allow him to get both a coffee and a doughnut so 2 would be the minimum value. I would think. But that's wrong.i need Q21 solutionTask 5: Consumption as young and consumption as old Now suppose Mary is thinking about her retirement and wants to understand how much to save. Today she can either con- sume or save for retirement. During her young, working life she will make 100.000 euros. Thus, her current budget constraint is Cy + S = 100.000. In her retirement she has no income, only the amount she saved as young. She can save at a rate of (1+r). So, her budget constraint as old is Co = (1+r)S. (a) Write Mary's lifetime budget constraint as plot it in a graph. Tip: Solve for savings while old and substitute in the young budget constraint. (b) Mary's utility from consumption as young and consumption as old is U(Cy,Co) = 1-0 Solve Mary's maximization problem. What is the MRS and the MRT? (c) Suppose Mary wins the lottery while young. What is the effect on her optimal decision for consumption as young and as old? (d) The local bank decided to increase the interest rate on savings. Discuss the effect of this increase…
- 4. "The increase in value would be created by having available one additional unit of a limiting resource at the original cost" is: A) Demand price B) Shadow price C) None of the above 5. The following statements have been made about rolling budgeting: 1) Keep updating the budgeting by adding further an accounting period when the earlier has expired. 2) The variants of the budget are not adjusted to reflect actual levels. Which of the above statements is/are true? A) Only 1 B) 1 and 2 C) None of the above(2) (a) Write out Ann's expenditure minimization problem for U (x, y) ≥ Ū. (b) Write out the tangency condition for expenditure minimization. (You do not need to show your work.) How does it compare to the tangency condition in Part (1c) above. Explain (50 words or fewer.) (c) Now set, P₂ = 4 and Py = 2. Use the tangency condition and U(x, y) = U to solve for Ann's compensated demands as a function of U. (Normally, compensated demands are functions of Ū, Pr, and Py. Here we have explicit values for the prices, and compensated demands will be a function of only Ū. It is worth noting that if a = b³, then b = a) (d) Use your answer to Part c to write out Ann's expenditure function.(2) (a) Write out Ann's expenditure minimization problem for U(x, y) > Ū. (b) Write out the tangency condition for expenditure minimization. (You do not need to show your work.) How does it compare to the tangency condition in Part (1c) above. Explain (50 words or fewer.) (c) Now set, P₂ = 4 and Py = 2. Use the tangency condition and U(x, y) = Ū to solve for Ann's compensated demands as a function of U. (Normally, compensated demands are functions of Ū, PE, and Py. Here we have explicit values for the prices, and compensated demands will be a function of only Ū. It is worth noting that if a = 6³, then b = a) (d) Use your answer to Part c to write out Ann's expenditure function.