Question

Income Assets/Wealth/Savings Amy $10 None Bart $10 $10 Cash Carla $10 10 shares IBM stock For all the problems below, assume that people will spend all of their income and 20% of the value of their assets on buying widgets during the year.

pls help

Answer 1

Person A B C D Widgets Purchased Income Asset Total spending Widget cost (Total spending/per (Income + 20% asset) Widget cost) 100 10 10 10 + (0.20 * 10) = 12 1010*$1 = 10 10+(0.20 * 10) = 12 2. Amy 10 3 4 Bart Carla

Answer 3

As we have seen in the above table the number of widgets purchased is dependent on the income and widget price, so if the income remains same and the widget price rises then the total purchase of widgets will fall.

Correct answer is option (b).

Answer 4

Person Income Asset Total spending (Income + 20% asset) Widgets Purchased Widget cost (Total spending/per Widget cost) 20 20 Amy Bart 20+ (0.20 * 10) = 22 20 + (0.20 * 20) = 24 Carla 2010*$2 = 20

When all the prices rise, we can see from the above example that Bart is the one who has decreased his purchase the most and also having a lot of cash.

So, option (a) is correct.

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