Consider a two-period model in which you work and save in the initial period (period 0) and live off savings and the interest from savings in retirement (period 1). Suppose that income in period 0 is $250,000, income in period 1 is $0, and the interest rate is 50%. Suppose that preferences are such that after tax consumption is equalized in period O and period 1. On the diagram show after- tax savings. C: ($ x 1,000) 450 400 350 300 250 200 150 100 50 25 50 75 100 125 150 175 200 225 250 275 300 325 350 Co ($ x 1,000)
Q: The demand function for a particular product is given by D(x)=0.5x^2+3x+190‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾‾√D(x)=0.5...
A: Here, a particular demand function is given as: D(x)=0.5x2+3x+190 To find: marginal revenue at the q...
Q: From your perspective explain Globalization and its impact on countries. Identify at least two pros ...
A: The exchange of capital, goods, and services across international borders or territories because goo...
Q: Discuss divergent views on population growth
A: Population growth:- The rise in the number of individuals in the population is known as population e...
Q: The vertical difference between TVC and TC is equal to
A: To find : What is vertical difference between TVC amd TC.
Q: An externality arises when one economic agent's actions affect the welfare of others in ways that ar...
A: The indirect benefit or cost being caused to third parties mainly arising due to the effect of activ...
Q: Historically, which of the following are reasons that a large US public debt might not threaten to b...
A: An increase in US public debt might not threaten to bankrupt the Federal government on account of di...
Q: How was the recession in 2020 different than the recession in 2008? What was the government response...
A: Recession: It is one of the phases of the business cycle, during the recession employment will be re...
Q: The class that owns the mode of production is in the dominant position and exploits the other classe...
A: Here, it is given that a firm or class has ownership of mode of production due to which it exploited...
Q: The graph below shows the MB of pollution control (which is known) and the MAC of pollution control,...
A: The figures provided show the Minimum Profit of Pollutioñ and the Cost of Social Reduction of Uncont...
Q: Consider an economy that producos and consumes only three goods. The following table shows the price...
A: GDP growth rate is defined as the rate of increase in the GDP of a country during a period. The peri...
Q: Price agreement Break the agreement Perlis Price agreement (3,2) A (-1,3) B Break the (4,-1) C (0,0)...
A: 17) Nash equilibrium is the strategy in the game from which no player has an incentive to deviate. ...
Q: Economic activity should continue to expand at a similiar rate to 2021's projected rebound, on the b...
A: Monetary policy can be either expansionary monetary policy or contractionary monetary policy, expans...
Q: Discuss the likely effects of an increase in uncertainty about cash flows on the responsiveness of a...
A: Introduction When the interest rate changes on debt, it will impact the net income of firms. It will...
Q: A firm that always employs two workers for each unit of capital follows which type of production fun...
A: The technological relation that exists between quantities of the output of goods and the quantities ...
Q: In the simple Keynesian model, if aggregate expenditure is less than GDP, output will a)decline as ...
A: The expenditure-output model displays the relationship between aggregate expenditure and economic ou...
Q: II. Helping Conchita-Crem to minimize costs Suppose that the labor cost of Conchita-crem is $20 USD ...
A: Given production function q=10L^0.5 K^0.5 Price of labor=$20 Price of capital=$5
Q: Refer to the accompanying figure. If the market for doughnuts is perfectly competitive, and the pric...
A: Here, the given graph shows the marginal cost and average cost of producing doughnuts by the firm in...
Q: In an increasing cost industry, the long-run market supply curve is _____ because the long run _____...
A: The expenses that are being incurred by the business for carrying out transactions are known as cost...
Q: Suppose Cody has utility function U (x, y) = a/¤ + ß/ỹ over goods x and y, where a 2 and B = 2. a) I...
A: The utility function for Cody is, U(x,y)=2x+2y Given the prices and income we find the optimal bundl...
Q: An increase in the money demand, with money supply held constant, means that we will observe O a. A ...
A: Equilibrium interest rate is determined where quantity of money demanded equals quantity of money su...
Q: Scenario 1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, mar...
A: In a monopoly, Marginal revenue lies below the demand curve. This implies that the firm has to decre...
Q: 1. Two interesting public goods are radio and television signals. A. In the U.S., private markets ha...
A: The two broad categories of goods are :- (1) Public goods (2) Private goods
Q: 2. ENUMERATE SOME COMPARISONS AND CONTRASTS OF THE CONCEPT OF DEMAND AND CONCEPT OF SUPPLY. Give 5 e...
A: Demand and supply are two essential components of a market that determine the equilibrium quantity a...
Q: Is the relationship between total fertility rate and the rate of enrollment of girls in secondary sc...
A: Yes, the overall fertility rate and the rate of female secondary school enrolment are linked.
Q: You have 6 hours to study for 2 exams tomorrow. The relationship between the time studying and test ...
A: A consumer maximises his utility at a point where marginal utility per dollar for two goods are equa...
Q: Automatic stabilizers a)increase consumption during a recession above what it would otherwise be...
A: Automatic stabilizers work to maintain the equilibrium in the economy. Too much of inflation or def...
Q: 7. Marginal utility is equal to average utility at that time when average utility is
A: To find : When is margin utility equal to average utility.
Q: 2. A consumer has utility function и(х, у) — x+y for two goods, where x > 0 denotes the amount of X ...
A:
Q: Use the 3-equation model diagrams to show how the economy can fall into a deflation trap. Explain, w...
A: A deflationary trap, according to Yasushi Iwamoto, an economics professor at the University of Tokyo...
Q: Select one: O Neither country has a comparative advantage in the production of timber or honey. O Le...
A: Comparative advantage arises when the country produces good at lower opportunity cost than other cou...
Q: Info for the following two questions: Consider the sequential game below, with two players (1 and 2)...
A: Answer -
Q: 11. Which of the following is a common criticism of government price controls? a) They restrict the ...
A: In a market, governement generally use price control strategy to restrict the unfair pricing policie...
Q: To minimize GDP fluctuations, the government should run a budgetin times of recession and a budget i...
A: When talking about GDP fluctuations, it is the cause of the fluctuations in the business cycle such ...
Q: Polio is a disease caused by a contagious virus that can result in paralysis. A vaccine prevents the...
A: a) The vaccine here is considered as a positive externality. A positive externality is one that prov...
Q: Using the data in the table below, calculate the CPI and the inflation rate in each year, using 2013...
A: CPI = (cost of basket in current year/cost of basket in base year )*100 The base year is 2013 ------...
Q: List institutions that influence international environmental policy and describe how nations handle ...
A: Environmental policy is a problem-solving tool that takes the help of different domains like economi...
Q: Suppose the market demand for pizza is given by Qd = 300 – 20P and the market supply for pizza is gi...
A: Substitute Goods Substitute goods refers to the goods that can be used in place of one another. In ...
Q: The diagram below shows the short - run cost curves for 3 perfectly competitive firms in the same in...
A: In a perfectly competitive market, price is constant so it is equal to marginal revenue. Profit is m...
Q: what do you understand about unemployment rate among young graduates?
A: Unemployment is referred to be a situation whereby a person who has the ability to work and is also ...
Q: 3. Explain where a perfectly competitive firm's marginal revenue curve is located relative to price ...
A: Perfect competition this is a type of a market structure.
Q: :0. Economic survey is published by
A: To find : Who publish economic survey.
Q: Two firms compete in prices in a market for a homogeneous product. In this market there are N > 0 co...
A: The equilibrium price is the price that is achieved where the demand curve of the market is equal to...
Q: Maia and Yousef just got married. Yousef recently graduated and received a master's degree in childh...
A: Here, when analyzing the given information it can be said that Mala and Yousef are unemployed due to...
Q: Which of the following statements correctly describe discouraged workers? (If none of the choices ap...
A: A discouraged worker is not part of labor force because the individual is not actively looking f...
Q: You are the Southeastern Michigan regional manager at Coca-Cola, responsible for production and pric...
A: Given inverse demand function P=10.25-0.00025Q TC for coca cola = 0.25q
Q: B. Under market condition, firms make normal profits in the long run.
A: To find : Under which market firm make profit in long run.
Q: We have looked at different methods for calculating the cost of meals (food cost + production cost +...
A: Actual food costs can be used for the calculation of meal costs. A cost-plus pricing strategy can be...
Q: d on Megan's and Larry's respective willingness to pay, plot the market demand curve on the followin...
A: Assume that there is a market- market for apartment. The price of each apartment is $100,000. Suppos...
Q: According to the Law of Elasticity, there are elastic and inelastic markets. If we relate this conce...
A: In a market with elastic demand for products it will be favorable to decrease prices because for suc...
Q: The life-cycle model explains comparative advantage as follows: a. at the invention stage, ...
A: The life-cycle model After the Heckscher-Ohlin model failed to describe the observed pattern of inte...
Step by step
Solved in 3 steps with 1 images
- Assume that an individual expects to work for 40 years andthen retire with a life expectancy of an additional 20 years.Suppose also that the individual’s earnings increase at a rateof 3 percent per year and that the interest rate is also 3 percent(the overall price level is constant in this problem). What(constant) fraction of income must the individual save ineach working year to be able to finance a level of retirementincome equal to 60 percent of earnings in the year just priorto retirement?assume elsa has current income of $50000 and expects income of $60000 next period. interest rate is 6% elsa desires to have the same amount of consumption expenditure during both periods. in the two period certainty framework, determine how much elsa's expenditures are during each period is elsa a saver or spenderConsider worker who is offered a salary bonus of $2,000 for each of the next two years if he or she erolls in a job training prgram this year. The total cost to the worker, including any forgone earnings, is $3,500. a. What is the internal rate of return on this investment? b. Would this be a good investment for someone with a discount rate of 6%
- Suppose a person lives for 4 periods. His salary during each period of his life is $30, $60, $90 and $0. He was born without any financial wealth. 1. If the interest rate is 8% per period, what is the present value of the income of this agent? 2. If the individual wishes to have a constant consumption during his life, what will it be? Deduct his level of savings during each of the 4 periods of his life. 3. Suppose our individual cannot borrow (but can save). Determine the consumption and savings profile of the individual. 4. Suppose our individual receives an inheritance at birth of $10. How your answer in c) be affected?a) Suppose you put $350 into a bank account today. Interest is paid annually and the annual interest rate is 6 percent. What is the future value of the $350 after 4 years? b) Suppose you are deciding whether to buy a particular bond from your local municipality. If you buy the bond and hold it for 4 years, then at that time you will receive a payment of $10,000. Assume the interest rateis6percent. Underwhatcircumstanceswillyoubuythebond?Meaninguptowhatpriceareyou willing to pay.1. Consider a household in the two-period consumption-savings model with well-behaved preferences over period-1 and -2 consumption given by u(c1,c2). Suppose that interest income in period 2 is taxed at a constant rate of T;. Assuming no initial endowment of wealth, Ao = 0, and the terminal condition A2 = 0, the household has the following nominal lifetime budget constraint: %3D P2c2 Y2 Pịci + = Y1 + (1+i(1 – Ti)) (1+i(1 – T;)) (a) Using indifference curve analysis, graphically locate the optimal choice (cj, cž). Label slopes and intercepts on your graph. (b) Write down the household's intertemporal optimality condition in terms of the gen- eral utility function. (c) In the United States, interest income received by households is taxed at a positive rate (i.e. T; > 0) while interest income paid by households is not taxed (i.e. Tị = 0). Suppose legislators propose complete elimination of this tax. Use economic logic and your answer from part (b) to explain how this policy change would…
- The permanent income hypothesis is consitent with cross-section and time-series data because a. higer-income households are savers, since their current income includes positive transistory conponents. O b. higer-income households are savers, since their current income includes negative transistory conponents. c. lower-income households are dissavers, since their current income includes positive transistory components. O d. lower-income households are savers, since their current income includes negative transistory conponents.Patience has a utility function 1/2 1/2 U(cl, c2) = c? + 0.80c/? where c is her consumption in period 1 and c is her consumption in period 2. Her income in period 1 is 3 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2? a. 2 b. 0.13 c. 0.25 d. 0 е. О.38 20% 13% 25% 0%Economics Suppose an individual lives two periods, 0 and 1. With income of 3000 at period 0 and 1000 at period of 1. preference is given by U(CO,C1) = InCO + 0.8lnC1. The market interest rate is 10 percent. So, the individual spends___ dollars at period 0 and dollars at period 1 for consumption. If now the government levies 25 percent marginal tax on capital income from saving. Then the individual spends___ dollars at period 0 and _____dollars at period 1, and the government tax revenue is dollars. Please fill the blanks.
- 3. Consider a society of identical individuals who live for two periods. They have the following utility: In co + 3 5 In ci Each individual earns $600 when young, in period 0, and no income in period 1, when old. They can borrow and lend at interest rate r, and the price of consumption is 1. (a) Write down this individual's lifetime budget constraint (b) Solve for this individual's consumption in period, and savings, as a function of r. (c) Suppose now that there is a Social Security program. The gov- ernment collects $ 60 from this individual in period 0, and gives it back with interest r in period 1. i. What kind of social security system is this? ii. What is the new amount of savings? iii. What is the impact of this program on the individual's wel- fare? (d) Suppose some individuals have utility 1 In co +In c₁ 9 The social security system still forces them to save $60. i. If they are still free to borrow and lend at r, what will their optimal choice of consumption and savings be,…When analyzing how borrowing and lending affect the consumer's budget constraint, we measure spending in the current time period on the horizontal axis and spending in the future time period on the vertical axis. Assume that the interest rate at which the consumer can lend and borrow is 10%, income in period 1 is $1000 and income in period 2 is $1200. The point of maximum current consumption can be expressed as 1000+ 1200/1.1. 1000(1.1) + 1200. 1000+ 1200 + .1 1000/1.1 + 1200/1.1 + 1.Consider a forward-looking individual who aims at maximizing her lifetime utility from her lifetime resources. Assume the initial endowment of the individual isand her expected labour income is in the sequence Her utility function takes the form where is consumption in period and . Assume the real interest rate, is constant but not equal to the discount rate . Suppose that this individual lives for two periods, write down her intertemporal budget constraint and carefully interpret it. Explain why the lifetime budget constraint must be satisfied with a strict equality. From the intertemporal budget constraint, derive the permanent income hypothesis (PIH) and explain the drivers of consumption growth in this model.