3. Assume there is a constant per unit opportunity cost of Consumption (call it "Saving"). If...

Question

Question

3. Assume there is a constant per unit opportunity cost of Consumption (call it Saving). If an individual wants to maximize his net utility (minus opportunity cost), set up the math problem he would solve. Use the utility function from problem 2. Utilit U(C) =-Ca, where C is consumption. y

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

It is given that the opportunity cost of consumption is savings. Lets call it “S”. It means the per unit cost of consumpti

Add a comment

Answer 2

Similar Homework Help Questions

3. Assume there is a constant per unit opportunity cost of Consumption (call it “Saving”). If...

3. Assume there is a constant per unit opportunity cost of Consumption (call it “Saving”). If an individual wants to maximize his net utility (minus opportunity cost), set up the math problem he would solve. Use this given utility function: U(C) = (1/a) * C^a. 4. Maximize your problem from (3) to solve for the individual’s level of optimal consumption. Does the optimal consumption depend on the opportunity cost? a. Show that the individual will consume more when the opportunity...
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...

(40 marks) Bob is deciding how much labour he should supply. He gets utility from consumption...

(40 marks) Bob is deciding how much labour he should supply. He gets utility from consumption of beer (given by C) and from leisure time (given by L), which he spends hanging out with his friend Doug. This utility is given by the following utility function: U(C, L) = ln(C) + θ ln(L) where the value of θ was determined by your student number and ln(C) denotes the natural logarithm of consumption etc. Given this utility function, Bob’s marginal utility...
) Bob is deciding how much labour he should supply. He gets utility from consumption of...

) Bob is deciding how much labour he should supply. He gets utility from consumption of beer (given by C) and from leisure time (given by L), which he spends hanging out with his friend Doug. This utility is given by the following utility function: U(C, L) = ln(C) + θ ln(L) where the value of θ was determined by your student number and ln(C) denotes the natural logarithm of consumption etc. Given this utility function, Bob’s marginal utility from...
Bob is deciding how much labour he should supply. He gets utility from consumption of beer...

Bob is deciding how much labour he should supply. He gets utility from consumption of beer (given by C) and from leisure time (given by L), which he spends hanging out with his friend Doug. This utility is given by the following utility function: U(C, L) = ln(C) + θ ln(L) where the value of θ was determined by your student number and ln(C) denotes the natural logarithm of consumption etc. Given this utility function, Bob’s marginal utility from consumption...

(40 marks) Bob is deciding how much labour he should supply. He gets utility from consumption...

(40 marks) Bob is deciding how much labour he should supply. He gets utility from consumption of beer (given by C) and from leisure time (given by L), which he spends hanging out with his friend Doug. This utility is given by the following utility function: U(C, L) = ln(C) + θ ln(L) where the value of θ was determined by your student number and ln(C) denotes the natural logarithm of consumption etc. Given this utility function, Bob’s marginal utility...
Bob is deciding how much labour he should supply. He gets utility from consumption of beer...

Bob is deciding how much labour he should supply. He gets utility from consumption of beer (given by C) and from leisure time (given by L), which he spends hanging out with his friend Doug. This utility is given by the following utility function: U(C, L) = ln(C) + 10 ln(L). Given this utility function, Bob’s marginal utility from consumption is given by: MUC = ∂U ∂C = 1 C and his marginal utility from leisure is given by: MUL...
Suppose there is a nurse who is facing the following problem: he likes consumption C but...

Suppose there is a nurse who is facing the following problem: he likes consumption C but he can only get one unit of consumption every time that he earns a dollar (1 dollar = 1 unit of C) He works as a nurse in a hospital and earns the minimum wage of 10 dollars per hour. This person has the liberty to work as many hours as he pleases but has only 24 x 30 = 720 hours available in...

Question 8: Suppose that Bibi's utility function for inter-temporal consumption is: U(C0.cl)-In(C0) + [0.4 * İn(C1)]...

Question 8: Suppose that Bibi's utility function for inter-temporal consumption is: U(C0.cl)-In(C0) + [0.4 * İn(C1)] where Cois his current period consumption, C, is his future period consumption. Bibi is endowed with mo 90,000 in this period (to) and mo -$500,000 in the next period (t1). And suppose there a perfect capital market in which Bibi can borrow and lend at 25% (risk-free). i. What is Bibi's optimal consumption bundle (i.e., the optimal level of current and future consumption) if...

3. Assume there is a constant per unit opportunity cost of Consumption (call it "Saving"). If...

Homework Answers

Add Answer to:
3. Assume there is a constant per unit opportunity cost of Consumption (call it "Saving"). If...

Post as a guest

Earn Coins

3. Assume there is a constant per unit opportunity cost of Consumption (call it “Saving”). If...

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...

(40 marks) Bob is deciding how much labour he should supply. He gets utility from consumption...

) Bob is deciding how much labour he should supply. He gets utility from consumption of...

Bob is deciding how much labour he should supply. He gets utility from consumption of beer...

(40 marks) Bob is deciding how much labour he should supply. He gets utility from consumption...

Bob is deciding how much labour he should supply. He gets utility from consumption of beer...

Suppose there is a nurse who is facing the following problem: he likes consumption C but...

Question 8: Suppose that Bibi's utility function for inter-temporal consumption is: U(C0.cl)-In(C0) + [0.4 * İn(C1)]...

3. Assume there is a constant per unit opportunity cost of Consumption (call it "Saving"). If...

Homework Answers

Add Answer to: 3. Assume there is a constant per unit opportunity cost of Consumption (call it "Saving"). If...

Post as a guest

Earn Coins

Add Answer to:
3. Assume there is a constant per unit opportunity cost of Consumption (call it "Saving"). If...