EBK ECON MICRO
6th Edition
ISBN: 9781337671828
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 13, Problem 6P
A
To determine
The effect on the market interest rate when the purchase price of capital increases:
- An increase in the productivity of capital.
- A shift in preference toward present consumption and away from future consumption.
Concept Introduction:
The market of the loanable fund is similar to the market of any good the price of the loanable fund is the interest rate.
B
To determine
The effect on the market interest rate when productivity of capital increases:
Concept Introduction:
The market of the loanable fund is similar to the market of any good the price of the loanable fund is the interest rate.
C
To determine
The effect on the market interest rate when there is a shift in preference toward present consumption and away from future consumption
Concept Introduction:
The market of the loanable fund is similar to the market of any good the price of the loanable fund is the interest rate.
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The preferences of a consumer are represented by the following utility function:
U = min (×1, 2x2)
If income is 100 and p1=p2=1
a) What is the optimal bundle?
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c) If p2=4, what is the new optimal bundle?
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