Homework Answers
c) the real rate of interest - is correct
Real rate of interest is the household's rate of time preference.
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2. The household's rate of time preference is given by a) the slope of the budget...
1. If the real interest rate is denoted by p, the present value of consumption in...
1. If the real interest rate is denoted by p, the present value of consumption in an intertemporal choice model of two periods is given by? a) ci +c2/(1+p) b) c1 (1-)+c7/(1-P) c) ci/(1+p) +c2/(1-P) d) ci tc2 2. The household's rate of time preference is given by a) the slope of the budget constraint. b) the slope of the indifference curves. c) the real rate of interest. d) the slope of the 45° line. 3. According to Keynes, the...
Numerical Example: A household's optimization problem Given: household's utility: U(C,e) 15 In l 16 In C...
Numerical Example: A household's optimization problem Given: household's utility: U(C,e) 15 In l 16 In C total time endowment h 9, real wage w7.5, taxes T 20 and capital income T30 Follow these steps: write down the budget constraint o substitute the BC into the objective function o optimize (write down the FOC) o find C, and labour supply N
If the consumer's income increases, a. The budget line will swing outward (slope will become shallower)....
If the consumer's income increases, a. The budget line will swing outward (slope will become shallower). b. The budget line will swing inward (slope will become steeper). c. The budget line will shift out parallel to the old budget line (the slope will be unchanged). d. The budget line will shift inward parallel to the old budget line (the slope will be unchanged). e. The indifference curves will change shape.
Question 1: Households A household's utility over consumption C and leisure l is U - U(C,0)...
Question 1: Households A household's utility over consumption C and leisure l is U - U(C,0) Cl 1. Plot the household's indifference curve for U-80 for values of C andlless than 20 (i.e. find the curve containing all combinations of C and ( such that U(C, 0) 80) The household has a time endowment of h=16 hours per day. The wage rate per hour is w 1.25. The household's labour income is therefore wNs, where N-h-l-16- l is the time...
Indifference Curves and the Budget Constraints: True, False, Uncertain or Not enough information: A given budget...
Indifference Curves and the Budget Constraints: True, False, Uncertain or Not enough information: A given budget constraint has only one indifference curve that is tangent for a specific set of prices however, there may be numerous indifference curves that intersect the same budget constraint. Explain in terms of relative prices, opportunity cost and marginal rate of substitution.
Given the graph below, if the consumer’s income decreases, a. The budget line will swing outward...
Given the graph below, if the consumer’s income decreases,
a. The budget line will swing outward (slope will become
shallower).
b. The budget line will swing inward (slope will become
steeper).
c. The budget line will shift out parallel to the old budget
line (the slope will be unchanged).
d. The budget line will shift inward parallel to the old budget
line (the slope will be unchanged).
e. The indifference curves will change shape.
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PLEASE answer completely What is a preference map? A preference map is a series of O...
PLEASE answer completely
What is a preference map? A preference map is a series of O A. points that have the marginal rate of substitution equal to the relative price O B. indifference curves O C. demand curves OD. Indifference curves that display a diminishing marginal rate of substitution Apples number per week) The figure ilustrates Sally's budget line and her preferences Complete the following sentence Point__is Sally's best affordable point and Sally prefers point O A. E: Cto point...
True, False, Uncertain or Not enough information: A given budget constraint has only one indifference curve...
True, False, Uncertain or Not enough information: A given budget constraint has only one indifference curve that is tangent for a specific set of prices. However, there may be numerous indifference curves that intersect the same budget constraint. Explain in terms of relative prices, opportunity costs and the marginal rate of substitution.
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good...
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good X is $100, what is her income? b. What is the equation for her budget line? c. What is the slope of her budget line? d. What is the price of good Y? e. What is Jane's marginal rate of substitution in cquilibrium? 8. Good X 40 80 0 Good Y
In the following diagram, we show one of...
1. Consider a variant of the two-period model of consumption-saving behavior. In this version of the...
1. Consider a variant of the two-period model of consumption-saving behavior. In this version of the model, the consumer has income y in the first period and no income in the second period. Her life-time budget constraint is c+ a - 1+r = y. (a) Draw this budget constraint in a diagram with con horizontal axis and d on vertical axis. What are the slope and vertical intercept of this budget constraint? Label the endowment point in the diagram. (3...
1. If the real interest rate is denoted by p, the present value of consumption in an intertemporal choice model of two periods is given by? a) ci +c2/(1+p) b) c1 (1-)+c7/(1-P) c) ci/(1+p) +c2/(1-P) d) ci tc2 2. The household's rate of time preference is given by a) the slope of the budget constraint. b) the slope of the indifference curves. c) the real rate of interest. d) the slope of the 45° line. 3. According to Keynes, the...
Numerical Example: A household's optimization problem Given: household's utility: U(C,e) 15 In l 16 In C total time endowment h 9, real wage w7.5, taxes T 20 and capital income T30 Follow these steps: write down the budget constraint o substitute the BC into the objective function o optimize (write down the FOC) o find C, and labour supply N
Question 1: Households A household's utility over consumption C and leisure l is U - U(C,0) Cl 1. Plot the household's indifference curve for U-80 for values of C andlless than 20 (i.e. find the curve containing all combinations of C and ( such that U(C, 0) 80) The household has a time endowment of h=16 hours per day. The wage rate per hour is w 1.25. The household's labour income is therefore wNs, where N-h-l-16- l is the time...
Given the graph below, if the consumer’s income decreases,
a. The budget line will swing outward (slope will become
shallower).
b. The budget line will swing inward (slope will become
steeper).
c. The budget line will shift out parallel to the old budget
line (the slope will be unchanged).
d. The budget line will shift inward parallel to the old budget
line (the slope will be unchanged).
e. The indifference curves will change shape.
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PLEASE answer completely
What is a preference map? A preference map is a series of O A. points that have the marginal rate of substitution equal to the relative price O B. indifference curves O C. demand curves OD. Indifference curves that display a diminishing marginal rate of substitution Apples number per week) The figure ilustrates Sally's budget line and her preferences Complete the following sentence Point__is Sally's best affordable point and Sally prefers point O A. E: Cto point...
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good X is $100, what is her income? b. What is the equation for her budget line? c. What is the slope of her budget line? d. What is the price of good Y? e. What is Jane's marginal rate of substitution in cquilibrium? 8. Good X 40 80 0 Good Y
In the following diagram, we show one of...
1. Consider a variant of the two-period model of consumption-saving behavior. In this version of the model, the consumer has income y in the first period and no income in the second period. Her life-time budget constraint is c+ a - 1+r = y. (a) Draw this budget constraint in a diagram with con horizontal axis and d on vertical axis. What are the slope and vertical intercept of this budget constraint? Label the endowment point in the diagram. (3...
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