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A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: u(c1,c2) =...
5. A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: u(C1,C2)...
5. A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: u(C1,C2) = ccm, where Ct = consumption in period t and a + b = 1. Her income in period one is 1 = 500 and 12 = 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...
5. A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: u(C1,C2)...
5. A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: u(C1,C2) = ccm where ct = consumption in period t and a + b = 1. Her income in period one is 11 = 500 and 12 = 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...
Consider a consumer who lives for two periods. The consumer gets utility from consumption in each...
Consider a consumer who lives for two periods. The consumer gets utility from consumption in each period. The consumer also gets an endowment of time in each period, L hours, which the consumer can use to work or consume as leisure . The consumer gets NO utility from leisure, however. There is no borrowing or lending. (a)(10%) Let w1 and w2 be the wage rates per hour in periods 1 and periods 2 respect- ively. In period 1, the consumer...
Consider a consumer that lives only for two periods. He works in period 1 (and gets...
Consider a consumer that lives only for two periods. He works in period 1 (and gets income Y1) and retires in period 2 (and gets income Y2 < Y1). This consumer has the usual preferences over time: u(C1) + βu(C2) Assume that now the consumer is allowed to save or borrow. Write down the new budget constraint. What is the consumption in period 1 and period 2? Display graphically. Could the consumer be worse of? Could the consumer be better...
intermediate micro 4. Steve's utility function over leisure and consumption is given by NLY) - min...
intermediate micro
4. Steve's utility function over leisure and consumption is given by NLY) - min (31.7. Wage rate is w and the price of the composite consumption good is p=1. (a) Suppose w = 5. Find the optimal leisure consumption combination. What is the amount of hours worked? (b) Suppose the overtime law is passed so that every worker needs to be paid 1.5 times their current wage for hours worked beyond the first 8 hours, Will this law...
Assume the representative consumer lives in two periods and his preferences can be described by U(c,...
Assume the representative consumer lives in two periods and his preferences can be described by U(c, c' ) = c ^(1/2) + β(c') ^(1/2) , where c is the current consumption, c' is next period consumption, and β = 0.95. Let’s assume that the consumer can borrow or lend at the interest rate r = 10%. The consumer receives an income y = 100 in the current period and y' = 110 in the next period. The government wants to...
Suppose Sansa lives for two periods. Her preferences are represented as follows: u(c1, c2) = (1+0.8VC2...
Suppose Sansa lives for two periods. Her preferences are represented as follows: u(c1, c2) = (1+0.8VC2 where cı is today's consumption level and c2 is tomorrow's consumption level. Suppose Bob's income today is yı = 100 and his income tomorrow is y2 = 190. Interest rate is denoted by r. 1. Write down Sansa's optimization problem including the budget set. 2. Determine Sansa's optimal consumption bundle (Cl*, C2*) as a function of r.
Consider the standard two-periods consumption model where consumers have the utility func- tion u(c)-S Furthermore, let...
Consider the standard two-periods consumption model where consumers have the utility func- tion u(c)-S Furthermore, let a =0, y 0,and y-1. where 0 < ? and ? > 1 are parameters (a) Write down the consumer problem (b) Find the first order conditions. (c) Find the optimal consumption plan (c and c as function of variables ans parameters "given" to the consumer) Set ?-05, ? (d) (e) Set ?-2, ?-0.5 and r-0.02. Which consumption is larger, present or future? why?...
Question 1. (Consumption-Saving Problem): Suppose that a consumer lives for two periods. The utility function of...
Question 1. (Consumption-Saving Problem): Suppose that a consumer lives for two periods. The utility function of the consumer is given by with u> 0 where c and c2 are consumption in period 1 and period 2 respectively. Sup- pose that consumer has income y in the first period, but has no income in the second period. Consumer has to save in the first period in order to consume in the second period. Let s be the savings in the first...
Question 1. (Consumption-Saving Problem): Suppose that a consumer lives for two periods. The utility function of...
Question 1. (Consumption-Saving Problem): Suppose that a consumer lives for two periods. The utility function of the consumer is given by with u> 0 where c and c2 are consumption in period 1 and period 2 respectively. Sup- pose that consumer has income y in the first period, but has no income in the second period. Consumer has to save in the first period in order to consume in the second period. Let s be the savings in the first...
5. A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: u(C1,C2) = ccm, where Ct = consumption in period t and a + b = 1. Her income in period one is 1 = 500 and 12 = 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...
5. A consumer who lives for two periods has a standard Cobb-Douglas utility func- tion: u(C1,C2) = ccm where ct = consumption in period t and a + b = 1. Her income in period one is 11 = 500 and 12 = 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...
intermediate micro
4. Steve's utility function over leisure and consumption is given by NLY) - min (31.7. Wage rate is w and the price of the composite consumption good is p=1. (a) Suppose w = 5. Find the optimal leisure consumption combination. What is the amount of hours worked? (b) Suppose the overtime law is passed so that every worker needs to be paid 1.5 times their current wage for hours worked beyond the first 8 hours, Will this law...
Suppose Sansa lives for two periods. Her preferences are represented as follows: u(c1, c2) = (1+0.8VC2 where cı is today's consumption level and c2 is tomorrow's consumption level. Suppose Bob's income today is yı = 100 and his income tomorrow is y2 = 190. Interest rate is denoted by r. 1. Write down Sansa's optimization problem including the budget set. 2. Determine Sansa's optimal consumption bundle (Cl*, C2*) as a function of r.
Consider the standard two-periods consumption model where consumers have the utility func- tion u(c)-S Furthermore, let a =0, y 0,and y-1. where 0 < ? and ? > 1 are parameters (a) Write down the consumer problem (b) Find the first order conditions. (c) Find the optimal consumption plan (c and c as function of variables ans parameters "given" to the consumer) Set ?-05, ? (d) (e) Set ?-2, ?-0.5 and r-0.02. Which consumption is larger, present or future? why?...
Question 1. (Consumption-Saving Problem): Suppose that a consumer lives for two periods. The utility function of the consumer is given by with u> 0 where c and c2 are consumption in period 1 and period 2 respectively. Sup- pose that consumer has income y in the first period, but has no income in the second period. Consumer has to save in the first period in order to consume in the second period. Let s be the savings in the first...
Question 1. (Consumption-Saving Problem): Suppose that a consumer lives for two periods. The utility function of the consumer is given by with u> 0 where c and c2 are consumption in period 1 and period 2 respectively. Sup- pose that consumer has income y in the first period, but has no income in the second period. Consumer has to save in the first period in order to consume in the second period. Let s be the savings in the first...
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