The diagram depicts Julia's choice of consumption in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. Based on this information, which of the following statements is correct? Julia's endowment 100 67 23 Feasible frontier (10% interest rate) Feasible frontier (78% interest rate) 30 56 70 91 Consumption now (S) Select one: o a. When the interest rate is 78%, the maximum that Julia can borrow in period 1 is $56 (rounded to the nearest dollar). O b. When the interest rate is 78%, a consumption plan of $30 in period 1 and $67 in period 2 is in Julia's feasible set c. When the interest rate is 10%, the marginal rate of transformation of goods from period 2 to period 1 is 0.1 O d. When the interest rate is 10%, if Julia borrows $23 in period 1 then she can consume $70 in period 2 Consumption later ($)

The diagram depicts Julia's choice of consumption in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. Based on this information, which of the following statements is correct? Julia's endowment 100 67 23 Feasible frontier (10% interest rate) Feasible frontier (78% interest rate) 30 56 70 91 Consumption now (S) Select one: o a. When the interest rate is 78%, the maximum that Julia can borrow in period 1 is $56 (rounded to the nearest dollar). O b. When the interest rate is 78%, a consumption plan of $30 in period 1 and $67 in period 2 is in Julia's feasible set c. When the interest rate is 10%, the marginal rate of transformation of goods from period 2 to period 1 is 0.1 O d. When the interest rate is 10%, if Julia borrows $23 in period 1 then she can consume $70 in period 2 Consumption later ($)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

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.
A consumer has a utility function over consumption and leisure given by U(c, /) = In(c) + 4 In(/). The consumer is currently working 6 hours per day, is paid $15 per hour and the consumption good costs $5 per unit. Given this information, the consumer could increase their utility by %3D a. They are already at the optimal working hours b. We cannot determine whether they should be working more or less with the information given O c. Working less d. Working more Which of the following explanations for unemployment is inconsistent with the classical theory? a. Firms in a unionized industry cut workers as the union negotiates a higher wage b. A worker refuses to accept a job because they would rather wait for a better opportunity c. Workers choose to work fewer hours as unemployment benefits are generous d. Firms hold off on hiring new workers because they are worried that demand for their products will be low
Can you do an explanation for this graph please soon as possible.
Assume the consumer is correctly applying the rational spending rule (consumer equilibrium) for goods X and Z and he is at consumer equilibrium. If the price of X falls, then the marginal rate of substitution of X (in absolute value) will _ and the consumption in X will consumer equilibrium holding all other factors unchanged. Group of answer choices -__at the new increase; increase decrease; decrease decrease; increase increase; decrease
Economics u (x₁, x₂) = x²x² If the price of good 1 is $6/unit, the price of good 2 is $8/unit, and income = $118... What is this person's optimal consumption level for good 1?
!
3. Consider a parent who is altruistic towards her child, but also cares about her own consumption. The parent's utility over her own consumption and that of her child is up = log(co) +a log(ci) where c is the child's consumption, and a > 0 is the degree of parental altruism. Suppose that the parent can invest in the child's human capital by spending money (e) on her education; education generates human capital h /() and human capital is paid at rate w. The parent has a total income of (a) Write down an expression for the child's future consumption in terms of the parent's choice of e. (b) Now write down the Lagrangian for the parent's decision problem.
Consider an overtime rule that requires that workers get paid double for any weekly hours over 40. Draw a picture that shows how a worker decides how much to work. Label everything in your picture and explain what is happening. Consider an investment that costs $100 and pays back $10 each year as long as the person making the investment is alive. Construct an equation for the net present value of the investment. An individual has a utility function, U = AX1 X2 where X1 and X2 are consumption of goods 1 and 2. The individual also faces a budget constraint. Show mathematically how an increase in Aa§ects the individualís decisions about consumption of each good.
b. Using Fisher's Intertemporal Choice model, consider the following scenario: Suppose Milo earns $1,750 in the first period and $2,500 in the second period. If he consumes $1,200 in the first period and $1,550 in the second period, what is the i. interest rate? ii. Now if Milo's consumption changes to $1,800 in the first period and $2,000 in the second period, what is the new interest rate?
19
u (#1, #2) = x}x; If the price of good 1 is $4/unit, the price of good 2 is $9/unit, and income = $164... What is this person's optimal consumption level for good 2?