Assume that the autonomous consumption = 100 and the marginal propensity to consume = 80%. At what level of disposable income will savings = 0 ? A) 100 B) 1000 C) 800 D) 500
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- Need help on part (d) and (e) 6. Assume you can work as many hours you wish at £12 per hour (net of tax). If you do not work, you have no income. You have no ability to borrow or lend, so your consumption, c, is simply equal to your income. a) Derive and plot the feasible set, between daily values of consumption c, and “leisure”, l. Label the values at the intercepts (the points where the feasible frontier cuts the two axes). b) Assume that your optimal choice of consumption and leisure is to work 8 hours per day. Illustrate this choice diagrammatically using the feasible set and indifference curves. c) Use indifference curves and the feasible set to show why, given the properties of the optimal choice in part b), it is not optimal to work, say, 10, or 6 hours per day. d) Now assume that you receive an income of £140 per week from an unknown benefactor. Show the impact on your feasible set, and show a new optimal choice in which consumption increases but labour supply decreases.…How would you demonstrate part b) diagramatically 6. Assume you can work as many hours you wish at £12 per hour (net of tax). If you do not work, you have no income. You have no ability to borrow or lend, so your consumption, c, is simply equal to your income. a) Derive and plot the feasible set, between daily values of consumption c, and “leisure”, l. Label the values at the intercepts (the points where the feasible frontier cuts the two axes). b) Assume that your optimal choice of consumption and leisure is to work 8 hours per day. Illustrate this choice diagrammatically using the feasible set and indifference curves.Suppose that at current consumption levels an individual's marginal utility of consuming an extra sandwich is 10 whereas the marginal utility of consuming an extra coffee is 2. Then the MRS (of coffee for sandwiches) that is, the number of sandwiches the individual is willing to give up to get one more coffee is a 5 b. 2 C.1/2 d. 1/5
- no chagpt answer urgent. The marginal rate of substitution of current consumption for future consumption is A) the slope of the indifference curve. B) minus the slope of the difference curve. C) the downward slope of the budget constraint. D) the endowment point. E) the slope of the lifetime budget constraint.Whether a certain criterion is determinant or not is independent of the situation in which a product is consumed. True False In the context of disposing of consumer refuse, recycling cuts down on garbage while providing raw materials for other new products. True False Which of the following is a fundamental emotion evoked by positive, anticipatory appraisals that signal uncertainty about a positive outcome? a. Hope b. Confusion c. Surprise d. Pride Which of the following best describes chronic, repetitive purchasing behaviors that are in response to negative events or feelings? a. Addictive consumption b. Impulsive purchasing c. Window shopping d. Compulsive buying Retaliatory revenge is when a consumer yells insults and makes a public scene in an effort to harm the business. True FalseWhen Erica’s income changes from $1000 to $1500, her consumption changes from $700 to $1100. Erica’s Marginal Propensity to Consume = Group of answer choices a. 0.2 b. We do not have enough information to answer this question c. 1.25 d. 0.8 e. 0.6 f. 0.4
- Consider an economy with one consumption good, 100 identical consumers and 100identical firms. Each consumer is endowed with one unit of time and one unit ofcapital. The agent can spend time either working or enjoying leisure. A represen-tative consumerís utility function is u (x; l) = ln x + 2 ln l, where x is consumptionof goods and l is leisure. Each firm hires consumers to work and rents capital fromconsumers to produce goods: y = f (K; L) = K^1/2L^1/2, where L is the amount oflabor hired and K is the amount of capital rented. Both consumers and firms takegoods price p, wage rate w and rental rate r as given. Normalize p = 1. 1. Set up a representative consumerís utility-maximization problem.Derive the Marshallian demands for consumption and leisure as functions ofwage w and rental rate r 2. Set up a representative firm's profit-maximization problem. Writedown the first-order conditions regarding the choices of K and L 3. Set up all the market-clearing conditions. 4. Use the…Consider an individual who receives utility from consumption, c, and leisure, l. The individual has L time to allocate to work, n, and leisure. The individual’s consumption is a function of how much he works. In particular, c = root n. The individual’s maximization problem is max U =ln(c)+θl subject to c = √n n+l=L where θ > 0. Solve the maximization problem. Hint: Substitute both constraints into the objective function.The consumer choice is not restricted to the choice of consumptiongoods. In fact, it can apply to all our decisions that involve trade-offs. Suppose Mary has awage per hour of 10 euros. With her earned income she consumes. That isC=wH per day.She also decides how many hours to work of take leisure time each day.H=24-N, whereHis work and N is leisure. Her utility is given by （picture） Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif-ferent curve. What is the labor supply function?
- Consider Justin who makes $1,400 per week and just won a ‘set for life’ lottery ticket whichinvolves a fortnightly payment of $10,000 for 20 years. Currently he works 35 hours per week. Nowdo the following: • Illustrate the effect of the lottery win on Justins budget constraint using a fully labelleddiagram where i) the horizontal axis represents the hours of free time per week, and ii) thevertical axis represents Justins weekly consumption. • Illustrate on the same diagram Justins optimal decisions before and after the lottery winalong with his indifference curves. • Based on your diagram, discuss whether Justin will quit his job.Suppose a family (with 1 child) earns $50,000 per year and there is no publicly provided education. Assume the price of other goods is $2,000 and the price for education/ year is $5,000. Show how a school voucher redeemable for $20,000 worth of education changes the family's budget constraint. What happens to the amount of education the family purchases for the child?Suppose you have a monthly income of $1000, $850 in monthly expenses, and you can put money in a savings account that yields a monthly interest rate of 4%. Create a budget constraint showing the trade-off between present consumption (horizontal axis) and future consumption (vertical axis). How much will you have in the future if you choose to consume $850 now? Show this point on your budget constraint.
