
a)
Calculation of individual’s human wealth and total wealth.
a)

Explanation of Solution
The percentage discourage value of labor income is known as the individual human wealth. One can calculate individual human wealth as follows:
Based on the calculated value, one can calculate the total wealth as follows.
Thus, the human wealth is $ 109,524 and financial wealth is $159,524.
b)
Neo classical consumer’s consumption today and in future and the saving rate.
b)

Explanation of Solution
One can calculate the wealth used for consumption by a neo classical consumer in today and in future as follows:
The wealth used for consumption by a neo classical consumer will be $79,762 today and $83,750 in the future. Then, the saving rate can be calculated as follows:
c)
Change in today’s saving rate if current labor income increased by $20,000.
c)

Explanation of Solution
The increase of income by $20,000 will raise the total wealth by the same amount. Then, the marginal propensity to consume will become
d)
Change in today consumption if future labor income increased by $10,000.
d)

Explanation of Solution
If there is an increase in the future income, one can calculate the changes in total wealth only based on the present value of the interest rate. Thus, the total wealth will be changed to $9,524. Then, the consumption will be raised by the half of the total wealth. That is, the current consumption will increased by $4762
e)
Change in the total wealth and today consumption if the interest rate rises to 10.
e)

Explanation of Solution
If the interest rate becomes 10 %, one can calculate the new human wealth as follows:
Based on the calculated value, one can calculate the total wealth as follows.
Thus the, human wealth is $ 109,090 and total wealth is $159,090. Then, he will definitely change his consumption accordance with the change in the interest rate. Hence, one can calculate the today consumption as follows:
Here, the consumption changes from $79,762 to $79,545. Thus, the savings will be $20,455 (100,000 – 79,545). The decrease in consumption leads to an increase in the saving by $217 (20,455 – 20,238).
f)
Changes in the consumption if the professor could not borrow today.
f)

Explanation of Solution
According to the problem, initially, the student has a very low income. According to the model of neo classical consumption, she can line up her current consumption better with the future income through a borrowing of higher amount. This will not be possible if she refused to borrow. Suppose she consumes as much as she can consume today, it implies that the she will use up all her resources.
Want to see more full solutions like this?
Chapter 16 Solutions
Macroeconomics (Fourth Edition)
- Using the graph on the right, determine the per unit prices of capital and labour. 20- Given the information provided about the isocost lines, we know that the per unit price of capital is TC=$100 and the per unit price of labour is 16- TC $80 ○ A. $50; $20 ○ B. $2; $5 ○ C. $5; $2 ○ D. $20; $50 E. not determinable; not determinable Quantity of K 12 TC $60 TC $40 0 10 20 30 Quantity of L 40arrow_forwardThe diagram to the right contains isocost lines A and B. If the price of capital is the same for both lines, then the difference between isocost line A and isocost line B is that OA. the total cost is larger along B. B. the level of output is lower along A. C. both capital and labour are cheaper along A. OD. labour is more expensive along A. ○ E. labour is more expensive along B. Capital Labourarrow_forwardFor the firm whose cost curves are shown at right, the minimum efficient scale is ○ A. between 60 and 140 units of production. OB. about 20 units of production. OC. about 60 units of production. OD. about 100 units of production. OE. the level of fixed cost corresponding to SRATC2. SRATC₁ LRAC SRATC4 SRATC₂ SRATC3 เนด เad iso C 20 20 40 60 80 100 120 140 160 180 200 Output per Periodarrow_forward
- SRATC₂ SRATC3 In the figure, increasing long-run average total costs for the firm are confined to the output range OA. where the LRAC curve is downward sloping. B. above 80 units of output. O C. above 50 units of output. OD. between 50 and 80 units of output. SRATC₁ OE. between 10 and 100 units of output. ---- SRATC LRAC 10 20 30 40 50 60 70 80 90 100 Output per Periodarrow_forwardFor the firm whose cost curves are shown at right, the minimum efficient scale is OA. between 10 and 50 units of production. OB. about 80 units of production. O C. the level of fixed cost corresponding to SRATC₁. OD. about 10 units of production. ○ E. about 50 units of production. Cost per Unit SRATC₁ LRAC SRATC2 SRATC4 SRATC3 10 20 30 40 50 60 70 80 Output per Period 90 100arrow_forward• 3 different people working at any companies under the BPO industry in the Philippines. • What are the 3 different Vision, Mission, Duties and Responsibilities and Career Path of these people in their companies under the BPO industry?arrow_forward
- Module 6 ⚫(1902) Buckner C X | (1902) How to d x (1902) Buckner F X (1902) Productic X WP Videoplayer Canvas Login | Ir x | + Σ R mybrcc.instructure.com/courses/417310/discussion_topics/3420114?module_item_id=20155705 Spring 2025 Home Announcements Modules Syllabus Grades 8 People BRCC-_Library DLASC Module 6 Discussion - Business Costs Relaunch to update For this discussion, think about where you work or a business you have a significant amount of knowledge about. What is a common product that the business sells? What are the main costs the business has to incur in order to be able to sell that product? Which of these costs are fixed and which are variable? How much additional costs would be incurred if it were to sell one additional unit of that product (marginal cost)? Write a discussion thread about this business, the product it commonly sells, and your answers to the above questions. Also, respond to at least two threads created by your classmates. In these responses, share what…arrow_forwardRefer to the video to answer the following: • what are all the key policies or all the strategies the Philippine government should prioritize to accelerate sustainable economic growth? • these should consider the Philippines current economic challenges, including inflation, unemployment, and the need for digital transformation. "The Philippines' Strong Economic Growth" (YouTube link: https://youtu.be/1YtEoGp2ZeM?siJQfIv5kbu0txVsLL.)arrow_forwardsolve about this qarrow_forward
- Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningMacroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
- Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning




