Q83 Suppose Jillian spends $250 on books per year when her income is zero. As her income rises, she spends 8 percent of each additional dollar of income on books. The correct mathematical equation that describes the functional relation between her spending on books (B) and her income (Y) is... a. B = 250 + 8Y b. B = 250 + 0.02Y c. Y = 250 + 0.08B d. Y = 250 - 8Y e. B = 250 + 0.08Y Clear my choice
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- Suppose the household wants to consume equal amounts in two periods. She earns $100 in the first period and $150 in the second period. The interest rate depends on whether she saves or borrows. The interest rate on saving is 1%, while the interest rate on borrowing is 10%. What is her optimal consumption? Be sure to explain why you choose to save or borrow.Q19 Suppose a consumer can purchase only two goods: pasta and rice. Let the quantity of pasta be measured on the vertical axis and the quantity of rice be measured on the horizontal axis. If the price of pasta falls, with no change in the price of rice or in the consumer's money income, then the budget line for the consumer will rotate... a. Outward parallel to the existing budget line. b. Toward the origin and become flatter. c. Away from the origin and become steeper. d. Away from the origin and become flatter. e. Toward the origin and become steeper.The reason the substitution effect works to encourage a consumer to buy less of a product when its price increases is: a. the product is now relatively more expensive than it was before. b. other products are now relatively more expensive than they were before. c. the real income of the consumer has been increased. d. the real income of the consumer has been decreased
- If preferences for pizza increase and the price of labor to produce pizza decreases, the equilibrium quantity of pizza will ____ and the equilibrium price of pizza will _____ . increase, increase decrease, be indeerminate increase, be indeterminate increase, decrease Assume an intertemporal budget constraint that shows how consumption can be traded off between two periods, t and t+1. Assume the consumer can save and borrow at the same interest rate of 10%. Assume the consumer collects income of $100 in each period. To gain an extra $10 dollars in period t+1, what must the consumer give up in period t? $11 $9.10 $1 $10 A convex indifference curve implies what type of behavior? diminishing marginal utility complementary goods perfect substitutes inferior goodsAnthony spends all his income on two goods, X and Y and his tastes don't change between 2008 and 2009. The prices he paid and the quantities he consumed in 2008 are as follows: PX = 15, X = 20, PY = 25 and Y = 30. Suppose the prices in 2009 are PX = 6 and PY = 30, and his income in 2009 is €1,020, Anthony is as well off in 2009 as he is in 2008 Anthony is better off in 2009 than in 2008 Anthony is better off in 2008 than in 2009 There is not enough information to answer this questionKatie Kwasi's utility function is U(x₁, x₂)=5(In x₁)+x₂. Given her current income and the current relative prices, she consumes 10 units of x₁ and 15 units of x₂. If her income doubles, while prices stay constant, how many units of x₁ will she consume after the change in income? a)10 b)20 c)15 d)5
- What are the determinants for an individual demand? Derive with the help of indifferencecurves and the budget constraint the optimal consumption plan. How do you transfer theoptimal consumption plan into an individual demand function? (use graphs)Draw the consumption function as the relation of the consumer's income and expenditure. What does the slope of the consumption function depend on? Is the consumer's income the only factor determining the level of his consumption spending?A consumer has utility u(x,y) = x^4 y^2 where x is this year’s consumption, and y is next year’s consumption. She makes 600 dollars income this year and 720 dollars income the next year. There is also a bank where she can borrow money at the interest rate r=%50 and lend money (to the bank) at the interest rate r=%20 (of course, she will decide to borrow or lend this year and pay off her debt or receive her savings the next year). a. Should she borrow money from or lend to the bank this year? How much b. If her utility were u(x,y) = xy2 instead, re-solving (a), would she borrow money or lend? How much? c. If her utility were u(x,y) = x^c y^2, what should “c” be so that she ends up neither borrowing nor lending?
- Given f(x,y) = 2x2 - 6xy + 9y2, and Px= 7, Py= 5 and income, I = 175. Construct the budget contraint and Lagrange function and solve for the equilibrium values of x and y. (a) What is the equilibrium value of x? (Give your answer to two decimal places, if required) (b) What is the equilibrium value of y? (Give your answer to two decimal places, if required) (c) What is the value of the determinant of the bordered Hessian matrix? (Give your answer to two decimal places, if required) unanswered d. Based on the value of the Bordered Hessian, comment whether the objective function is maximized or minimized. Answer in one word.A consumer spends all her income on the two goods A and B. The quantity of good A bought is determined by the demand function QA = f(PA, PB,M) where PA and PB are the prices of the two goods and M is real income. A change in the price of A will also affect real income M via the function M = g(PA, PB, £M) where £M is money income. Derive an expression for the total effect of a change in PA on QA.Consider the market for Netflix Subscriptions. Show graphically and explain using economic intuition, what happens to the market price and quantity in each of the following 3. Bruno can spend his income on two different goods: smoothies and energy bars. For each of the following three situations, decide if the given consumption bundle is within Bruno’s consumption possibilities. Then decide if it lies on the budget line or not. a) Smoothies cost $2 each, and energy bars cost $3 each. Bruno has income of $60. He is considering a consumption bundle containing 15 smoothies and 10 energy bars.b) Smoothies cost $2 each, and energy bars cost $5 each. Bruno has income of $110. He is considering a consumption bundle containing 20 smoothies and 10 energy bars. c) Smoothies cost $3 each, and energy bars cost $10 each. Bruno has income of $50. He is considering a consumption bundle containing 10 smoothies and 3 energy bars. 4. In each of the following situations, describe the substitution…