which is the most preferred level of individual’s choice for public expenditure relating it with individual’s utility dependence, by considering three different groups? also draw the graph and intrepret it.
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which is the most preferred level of individual’s choice for public expenditure relating it with individual’s utility dependence, by considering three different groups? also draw the graph and intrepret it.
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- Suppose that C = a + bY, where C = consumption, a = consumption at zero income, b = slope, and Y = income. a. Are C and Y positively related or are they negatively related? b. If graphed, would the curve for this equation slope upward or slope downward? c. Are the variables C and Y inversely related or directly related? d. What is the value of C if a = 10, b = 0.50, and Y = 200? e. What is the value of Y if C = 100, a = 10, and b = 0.25?Suppose you are attempting to choose a measure of living standards within a particular region. Discuss the relative merits (pros and cons) of each of the following possible measures of living standards. Real household consumption expenditure per capita over the last 12 months (averagefor the region) Indicators of whether a household has a dirt floor, uses water from an improved source, and sends children to school (averagefor the region)Draw a consumption function for an individual whereS=-250+0.3Y. Show the change that would result from an increase in Income.
- Suppose that Y=MX+b, where Y=consumption, b=consumption at zero income, M=slope, and X=income(i) Are Y and X positively related or are they negatively related?(ii) If graphed, would the curve for this equation slope upward or slope downward?(iii) Are the variables Y and X inversely related or directly related?(iv) What is the value of Y if b=10, M=.50, and X=200?(v) What is the value of X if Y=100, b=10, and M=.25?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)Suppose Matt’s income is $120. He plans to spend it on two goods bread and avacado. Prices are: Pb = $4 per loaf of bread, Pa = $1 per avocado If Matt spends all his income on loafs of bread, how many does he buy? If Matt spends all his income on avocadoes, how many does he buy? If Matt buys 10 loaf of bread, how many avocados can he buy? Plot each of the bundles from parts A – C on a graph that measures avocadoes on the horizontal axis and loaves of bread on the vertical axis, connect the dots to find Matt’s budget constraint. Show what happens to the budget constraint if his income falls to $100, (prices do not change). Show what happens to the budget constraint if price of avocado rises to Pa = $2 per avocado, (income and price of loaves of bread did not change).
- What is it mean by full price and income when discussing household consumption?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.What is the type of consumption of household spending which is independent
- 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?Eren’s two main hobbies are taking vacations overseas (V) and eating expensive meals (M). His utility function is given as: U(V,M) = V^2MLast year, the average price of taking a vacation overseas was US$200 and the average price of an expensive meal is $50. However, due to supply problems in Onions, the average price of an expensive meal rose to $75. The average price of a vacation did not change. His income, which is $1500, did not change. Suppose that the Department of Welfare wants to know how much should be given to Eren to offset his change un utility due to the price increase of an expensive meal. Calculate the compensative variation (CV).Megan is a college student who consumes food and transportation. Last year, she consumed 90 meals and purchased 100 gallons of gasoline per month. Suppose that last year the price of a meal was $5 and the price of a gallon of gasoline was $2.23. However, this year, the price of a meal is $6 and the price of a gallon of gasoline is $3.92. As a result, Megan consumes 100 meals and 80 gallons of gasoline. For this example, assume Megan's utility this year is the same as her utility last year (and that her preferences have not changed). Calculate a Laspeyres cost-of-living index for Megan using 100 as the base for last year. In particular, the Laspeyres index for this year is nothing. (Enter your response rounded to two decimal places.)