Why would we see a decrease in demand for certain goods if incomes are rising in an economy? Веcause suppliers stop producing certain goods. when incomes are rising the demand for all goods increases. Thus, the statement is not true. some goods are inferior goods and consumers substitute normal goods for them when incomes are rising. when incomes are rising, people start saving more and reduce their consumption of all goods.
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- This question analyzes the baseline economy consisting of two goods, two periods, and two representative consumers with endowments. Xavier has Cobb-Douglas preferences over consumption today (i.e., period 1) and tomorrow (i.e., period 2). U( C1 , C2 )=0.51ln( C1 )+ 0.49ln( C2 ) . Yuri’s utility function is. U( C1 , C2 )=0.52ln( C1 )+ 0.48ln( C2 ) . Everyone has an income (endowment) of $100,000 each year. Food (consumption) purchased today and delivered today costs $1. There is no inflation and thus food purchased tomorrow and delivered tomorrow also costs $1. The market interest rate is 5%. (a) Between Xavier and Yuri, who is (relatively) most impatient, and why? (b) What is the present value of Xavier’s income? (c) What share of income does Xavier spend on consumption today? (d) For period 1 (i.e., today), who bought, who sold, and why?During a national emergency, the government issues coupons for the right to purchase goods 1 and 2: any buyer who wants to purchase a unit of either good must not only pay its price in money, but also in coupons. Suppose the unit prices of goods 1 and 2 in money are p1 = $3 and p2 = $1, and their unit prices in coupons are c1 = 1 and c2 = 2. A typical citizen has a monetary income of $120 and gets 90 coupons from the government. By default, we assume that both goods (and the money, and coupons required to buy them) are perfectly divisible. а) Illustrate the typical citizen’s budget set assuming that coupons are personalized and can only be used by the person they have been issued to.b) Now suppose that coupons are anonymous, and one can buy and sell them in the black market. Currently, the price of one coupon in the black market is $1. Illustrate the new budget set on your graph from (a). !!! Please, provide as much details and descriptions as possible as well as please make sure to…The reallocation of goods from low to high valued use can take the form of a change in legal ownership or a physical reallocation of the good from an area where it has low value to an area where it has a higher value. In this case, used cars are worth [more, less] in Mexico than they are in the United States. We know this because the price of used cars is [higher,lower ] in Mexico compared to the US. If people are left alone to pursue their self-interest as they define it, owners of used cars will enrich themselves if they physically relocate there cars to Mexico and sell them. They might do this directly or middlemen may do it for them. In either case, used cars ["will be sent from u.s to Mexico", "will be sent from Mexico to U.S"] . The graph shows the used car markets in the US and Mexico when the government interferes in the free market and prevents/regulates the sale of…
- Consider the two-period endowment economy we discussed in class. In this economy, a household lives for two periods and can save s. The return on saving is the real interest rate,r. Income is exogenous and given as y and y'. Households have utility overconsumption,c, in each period by U(c)=In(c)+B In(c') where future utility is discounted with rate B. Households choose consumption in both periods,c and c'. 1-Write down the current period and future period budget constraints. Derive the lifetime budget constraints. 2-What is the slope of the lifetime budget constraint? What are the intercepts? What is the significance of the endowment point? 3-Write down the expression for the consumer's optimization problem. What is the tangency condition? Provide an intuitive explanation for this condition. 4-Solve for c,c', and s. Given that B=1 and r=0, how would you modify the answers for c,c; and s? Explain.If the market conditions for a given good are specified by Qd=60,000-500P and Qs=500P, If government decides to set the price at 40 current units, what policy is this? What are the implications of this action?what are Lexicographic preferences and Do you see any relation between this type of preferences and the post-Keynesian approach to consumer choice as discussed by Marc Lavoie?
- In the intertemporal choice model (C0 and C1 ) an individual is endowed with only future goods and no current goods. A drop in the real interest rate would cause the budget line to ______and move______. a. steepen, downward b. steepen, upward c. flatten, downward d. flatten, upward e. keep a constant slope, upward Note : I know the correct answer is D) but PLEASE DRAW A PICTURE TO HELP EXPLAIN THE ANSWER TO THIS QUESTION!!!!(Please explain with graphic) Suppose that a consumer cannot vary hours of work as he or she chooses. In particular, he or she must choose between working q hours and not working at all, where q > 0. Suppose that dividend income is zero, and that the consumer pays a tax T if he or she works, and receives a benefit b when not working, interpreted as an unemployment insurance payment. a. If the wage rate increases, how does this affect the consumer’s hours of work? What does this have to say about what we would observe about the behavior of actual consumers when wages change? Explained also with the graph b. Suppose that the unemployment insurance benefit increases. How will this affect hours of work? Explain the implications of this for unemployment insurance programs. Explained also with the graphAssuming Max and Bob have identical preferences, identical incomes, and the after-tax price of e-books is higher in Germany than in the U.S. and the after-tax price of printed books is higher in the U.S. than in Germany A. we cannot state with certainty anything about the quantity of e-books and printed books that Max and Bob will buy. B. we can state with certainty that Max will buy the same quantity of e-books and printed books as Bob. C. we can state with certainty that Max will buy relatively fewer e-books and more printed books than Bob. D. we can state with certainty that Max will buy more e-books and more printed books than Bob. E. we can state with certainty that Max will only buy printed books and Bob will only buy e-books. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- 1. When the S-shaped function cuts the 45-degree line from below there is ____ equilibrium.A. stableB. unstableC. multipleD. matched2. A situation in which one party to a potential transition has more information than anotherparty is called ____.A. Asymmetric InformationB. Information externalityC. Pecuniary externalityD. Pareto Improvement3. This theory proposes that a 'bit by bit' investment will not impact the process of growth.A. Coordination failuresB. Multiple equilibriaC. The Big PushD. O-Ring theory4. The situation of being unable or only barely able to meet the subsistence essentials of food,clothing, shelter, and basic health care.A. POVERTYB. ABSOLUTE POVERTYC. REAL POVERTYD. NORMAL POVERTY5. It is the savings expressed as a proportion of disposable income over some period of timeA. SAVINGS RATIOB. NET SAVINGS RATIOC. NET RATIO OF SAVINGSD. NET SAVINGS6. A condition that must be present, although it need not be in itself sufficient, for an event tooccur.A.…please explain each question. 1. We assumeconstantMPC in our model. Is this assumption true in the real world? 2. What determines the proportion of bonds/money that the household keeps? 3. What effect an increase of government spending will have on the output equilibrium in the goods market? Explain using autonomous spending.Another important aspect of Tourism Economics is the multiplier effect, which refers to the additional economic activity generated by tourism spending. When tourists spend money in a destination, it circulates through the local economy, benefiting not just the direct recipients of this spending but also other businesses and their employees. For example, tourists spending money in local restaurants support not only the restaurant staff but also local suppliers and their workers. The multiplier effect in Tourism Economics is essential because it: A) Reduces overall economic activity B) Only benefits the tourism sector C) Generates additional economic activity beyond the initial spending D) Leads to economic stagnation