The reasons for learning consumption and saving functions together.

Question

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Answer 1

Question

Chapter 9, Problem 1E

To determine

The reasons for learning consumption and saving functions together.

Expert Solution & Answer

Answer to Problem 1E

The reason for studying consumption and saving function together is that consumers have only two options either they can spend their income on present consumption or save it for future consumption.

Explanation of Solution

The income that the household sector of the economy earns can be used in two ways.

First, by purchasing goods and services for present consumption.
Second, by saving the income for future consumption.

Consumers don't spend all their income on present consumption, they retain something for future as well. Thus, consumption and saving always go together. Any change in one impacts the other and therefore are studied together.

Economics Concept Introduction

Consumption function − It is relationship between consumption and disposable income.

Saving function − It is relationship between saving and disposable income.

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1. A town relies on four different sources for its non-drinking water needs: dam water, reclaimed water, rain water, and desalinated water. The different sources carry different risks and costs. For instance, desalinated water is fully reliable due to abundant sea water, but it is more expensive than other options. Reclaimed water also has relatively lower risk than rain or dam water since a certain amount can be obtained, even during the dry. season, by the treatment of daily generated waste water. Using any of the four options requires an investment in that resource. The return on a particular water source is defined as the amount of water generated by the source per dollar of investment in it. The expected returns and standard deviations of those returns for the four water sources are described in the following table: Water resource Expected return St. Deviation Dam water 2.7481 0.2732 Reclaimed water 1.6005 0.0330 Rain water 0.5477 0.2865 Desalinated water 0.3277 0.0000 Higher…

1. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter." a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

Answer 2

Question

Chapter 9, Problem 1E

To determine

The reasons for learning consumption and saving functions together.

Expert Solution & Answer

Answer to Problem 1E

The reason for studying consumption and saving function together is that consumers have only two options either they can spend their income on present consumption or save it for future consumption.

Explanation of Solution

The income that the household sector of the economy earns can be used in two ways.

First, by purchasing goods and services for present consumption.
Second, by saving the income for future consumption.

Consumers don't spend all their income on present consumption, they retain something for future as well. Thus, consumption and saving always go together. Any change in one impacts the other and therefore are studied together.

Economics Concept Introduction

Consumption function − It is relationship between consumption and disposable income.

Saving function − It is relationship between saving and disposable income.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 9, Problem 1E

To determine

The reasons for learning consumption and saving functions together.

Expert Solution & Answer

Answer to Problem 1E

The reason for studying consumption and saving function together is that consumers have only two options either they can spend their income on present consumption or save it for future consumption.

Explanation of Solution

The income that the household sector of the economy earns can be used in two ways.

First, by purchasing goods and services for present consumption.
Second, by saving the income for future consumption.

Consumers don't spend all their income on present consumption, they retain something for future as well. Thus, consumption and saving always go together. Any change in one impacts the other and therefore are studied together.

Economics Concept Introduction

Consumption function − It is relationship between consumption and disposable income.

Saving function − It is relationship between saving and disposable income.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 9, Problem 1E

To determine

The reasons for learning consumption and saving functions together.

Expert Solution & Answer

Answer to Problem 1E

The reason for studying consumption and saving function together is that consumers have only two options either they can spend their income on present consumption or save it for future consumption.

Explanation of Solution

The income that the household sector of the economy earns can be used in two ways.

First, by purchasing goods and services for present consumption.
Second, by saving the income for future consumption.

Consumers don't spend all their income on present consumption, they retain something for future as well. Thus, consumption and saving always go together. Any change in one impacts the other and therefore are studied together.

Economics Concept Introduction

Consumption function − It is relationship between consumption and disposable income.

Saving function − It is relationship between saving and disposable income.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1E

To determine

The reasons for learning consumption and saving functions together.

Expert Solution & Answer

Answer to Problem 1E

The reason for studying consumption and saving function together is that consumers have only two options either they can spend their income on present consumption or save it for future consumption.

Explanation of Solution

The income that the household sector of the economy earns can be used in two ways.

First, by purchasing goods and services for present consumption.
Second, by saving the income for future consumption.

Consumers don't spend all their income on present consumption, they retain something for future as well. Thus, consumption and saving always go together. Any change in one impacts the other and therefore are studied together.

Economics Concept Introduction

Consumption function − It is relationship between consumption and disposable income.

Saving function − It is relationship between saving and disposable income.

Answer 6

Chapter 9, Problem 1E

To determine

The reasons for learning consumption and saving functions together.

Expert Solution & Answer

Answer to Problem 1E

The reason for studying consumption and saving function together is that consumers have only two options either they can spend their income on present consumption or save it for future consumption.

Explanation of Solution

The income that the household sector of the economy earns can be used in two ways.

First, by purchasing goods and services for present consumption.
Second, by saving the income for future consumption.

Consumers don't spend all their income on present consumption, they retain something for future as well. Thus, consumption and saving always go together. Any change in one impacts the other and therefore are studied together.

Economics Concept Introduction

Consumption function − It is relationship between consumption and disposable income.

Saving function − It is relationship between saving and disposable income.

Answer 7

Chapter 9, Problem 1E

To determine

The reasons for learning consumption and saving functions together.

Answer 8

Expert Solution & Answer

Answer to Problem 1E

The reason for studying consumption and saving function together is that consumers have only two options either they can spend their income on present consumption or save it for future consumption.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The income that the household sector of the economy earns can be used in two ways.

First, by purchasing goods and services for present consumption.
Second, by saving the income for future consumption.

Consumers don't spend all their income on present consumption, they retain something for future as well. Thus, consumption and saving always go together. Any change in one impacts the other and therefore are studied together.