Tom tunes pianos in his spare time for extra income. Buyers are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, second piano for $125, third piano for $140, and fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. How many pianos will he tune? 2 3 O
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- Because Income depends on work effort and work effort depends on nutrition, suppose the relationship between income (Y) and total food availability (F) in a poor household is given by: Y = 10F + 20F2 – 0.6F3 a) If food availability in a two-person household is 20, would it be “rational” to share the food? Explain. b) If food availability in a two-person household is 30, would it be “rational” to share the food? Explain.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.…Now,suppose N=3 with a market clearing interest rate. The first two agents are the same as earlier. The third agent has an endowment of 20 in the first period and consumes 15 in the second period. If the first two agents each consumed 21 units in the first period, how much did the third agent consume in the first period? Plz do fast
- Tom's income is 32. He consumes a single consumption good, C, which has a price of 2. His utility function depends on his marital status: when happily married, his utility is given byU=C^(1/2) When he is not married, his utility is given by U=0.5C^(1/2) a. Suppose that Tom is not currently married. What is his utility? Now suppose that Tom gets married.What is his utility? Assume Tom can spend all his income on his own consumption when he is married. b. Use compensating variation (CV) and equivalent variation (EV) to calculate the value of marriage to Tom. How do the two figures compare?Q. 5. For auto makers, an important decision is to determine what features a new car model should be provided based on cost-benefit analysis. In what ways can economists help auto manu- facturers estimate the marginal rate of substitution between features such as vehicle interior size and acceleration? (a) Examining production cost data (b) Conducting consumer surveys about willingness to pay for auto features (c) Solving the standard consumer model (d) Statistically analyzing historical data on purchases of different types of autos (e) B and D only Q. 10. When firms determine whether to invest in research and development (R&D), they need to consider many factors. Which of the following is NOT one of the important factors that should be considered? (a) The market size of the product today. (b) The market potential for the product in the next few years. (c) The R&D investment of the competitors on similar products. (d) Potential new products that may be substitutes of the…On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according tothe functionU(c, b) = 20c− c²+ 18b − 3b²a. How many cigars and glasses of brandy does he consume during an evening? (Cost isno object to J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum ofglasses of brandy and cigars consumed to 5. How many glasses of brandy and cigarswill he consume under these circumstances?
- Ewa spends all her 600 PLN bonus on the purchase of sweets and cosmetics. Draw the Ewa's budget line, knowing that her favorite sweets cost PLN 10 per pack and the price of cosmetics is PLN 25. •How will Ewa's situation be affected by the PLN 50 bonus increase? •What will happen if the price of cosmetics increases to PLN 30? •How, from the point of view of initial situation, we will evaluate the following quantitative combinations: –30 packages of sweets and 15 cosmetics –60 packages of sweets and 24 cosmetics –20 packages of sweets and 10 cosmetics –10 packages of sweets and 15 cosmeticsHelena earns $2000 this year and will earn $1500 the next year. The interest rate between each year is 10%. She wants to consume the same quantity each year. She wants to have spent all her money by the end of year 2. Warning: each question does build on each other How much would she save? How much would she consume? If she wins the lottery during the first year, raising her earnings to $10000 this year, how much would she save, how much would she consume? If she now wants to consume twice as much in year 1 as she does in year 2, how much would she save, how much would she consume? If she now has no preferences about her consumption, but she wants to save $5000 in year 1 (to buy a new car in year 2), how much would she consume in year 1 and year2?The Minister of Transport released its Festive season road accident statistics which shows that the probability of drivers committing an accident is 8% with utility , where H standsfor year income.The Minister further claims these Festive season road accidents cost the state (in terms of claims lodged) an average of R84 000 per annum. The Road Accident Fund is an insurance scheme providing compulsory indemnity cover to victims of vehicle accidents and taxi drivers. (a) Suppose that an average commuter earns R84 000 per annum. What is the expected utility of each commuter if the driver decides not to take insurance. (b) What is the cost of insurance policy to the Road Accident Fund? (c) Due to high accident rates in South Africa during the Festive season, the Road AccidentFund has issued a warning to government that the fund will be insolvent soon. Advise the Minister on the cost of insurance that can collapse the scheme. please answer a,b,c
- Mom’s Pretzels is a fairly small firm selling gourmet pretzels in a popular mall. As shop owner and operator, you have observed that your daily sales tend to follow a pattern that can be stated as: Q = 600 - 160PP + 1A - 25Ps + 6I where Q = unit sales of pretzels, PP = price of pretzels in dollars, A = advertising expenses, Ps = price of soda pop sold at your stand in dollars, and I = per capita income of customers in thousands of dollars. You are currently charging $1 per pretzel, spending $200 in advertising, charging $1 for a soda pop, and per capita income is $25,000. a. Compute price elasticity, advertising elasticity, income elasticity and cross-price elasticity. b. You are currently paying $.90 to produce a pretzel (including cost for dough cost to bake, and wrapping). Is this the profit-maximizing price? Explain/show your math.Suppose that there are only 10 individuals in the economy each with the following utility function over present and future consumption: U (c1, c2) = c1 +C2, where ci is consumption today, and c2 is consumption tomorrow. Consumption tomorrow is less valued because people are impatient and prefer consuming now rather than later. Buying 1 unit of consumption today costs $1 today and buying 1 unit of consumption tomorrow costs $1 tomorrow. All individuals have income of $10 dollars today and no income tomorrow (because they will be retired) but they can save at the market interest rater> 0. How much of his or her income will an individual consume today given that the interest rate is 0.3? O. Less than half of it O. Exactly half of it O. The individual is indifferent between consuming today and saving O. More than half of it O. All of it O. None of it How much of his or her income will an individual consume today given that the interest rate is 0.5? O. Less than half of it…1. Refer to graph (multiple choice) A. Refer to Graph. If the current wage rate results in a budget constraint of AB1, the individual will choose a. 0D hours of work and AD hours of leisure. b. AC hours of work and 0C hours of leisure. c. AD hours of work and 0D hours of leisure. d. 0C hours of work and AC hours of leisure. B. Refer to Graph. If there is a movement from equilibrium C to Equilibrium D, which one is the most accurate conclusion: a. The labor supply is decreasing b. The labor supply is increasing c. The individual is spending less hours working and the labor supply is decreasing d. The individual is spending more hours working C. Refer to Graph. The slope of the budget constraint AB1 is given by a wage = W1. A movement from AB1 to AB2 is due to: a. An increase in non-income wealth b. An increase in wage c. A decrease in non-income wealth d. A decrease in wage