Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 26, Problem 4SCQ
Summarize the Keynesian and Neoclassical models.
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(c) Assume an infinite horizon, continuous time and certainty.
Furthermore, assume an additively separable utility function in
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2. Question
The 'Democratic Family' consists of three members {mother m, father f, daughter
d}, that have different preferences with respect to how much money X € [0,8]
they think should be invested in the new family car. These preferences can be
represented by the following utility functions:
-
Mother m: um(X) = 2X - X²
Father f: uf(X) = 10X - X²
- Daughter d: ud(X) = 4X - X²
Calculate for each family member (f, m, d) the preferred amount of money
to invest in the new car denoted by X; for i = {m, f,d}. Assume that
(Xf, Xm, Xd) are the three alternatives on which the family must decide. Show
that each family member has rational preferences over this domain.
Preferences on the family level are determined by pairwise majority voting (all
family members vote on two alternatives). Derive the family preference and
check whether it is rational.
Assume that the final family decision is made by conducting sequential pair-
wise majority voting, where the loosing alternative is eliminated. Does…
Chapter 26 Solutions
Principles of Economics 2e
Ch. 26 - Do rational expectations tend to look back at past...Ch. 26 - Legislation proposes that the government should...Ch. 26 - Would it make sense to argue that rational...Ch. 26 - Summarize the Keynesian and Neoclassical models.Ch. 26 - Does neoclassical economics focus on the long term...Ch. 26 - Does neoclassical economics view prices and wages...Ch. 26 - What shape is the long-nm aggregate supply curve?...Ch. 26 - What is the difference between rational...Ch. 26 - A neoclassical economist and a Keynesian economist...Ch. 26 - Do neoclassical economists tend to focus more on...
Ch. 26 - Do neoclassical economists tend to focus more on...Ch. 26 - Do neoclassical economists see a value in...Ch. 26 - If aggregate supply is vertical, what role does...Ch. 26 - What is the shape of the neoclassical long-run...Ch. 26 - When the economy is experiencing a recession, why...Ch. 26 - If the economy is suffering through a rampant...Ch. 26 - If most people have rational expectations, how...Ch. 26 - Explain why the neoclassical economists believe...Ch. 26 - Economists from all theoretical persuasions...Ch. 26 - Is it a logical contradiction to be a neoclassical...Ch. 26 - Use Table 26.3 to answer the following questions....
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