Suppose you have income of $12and faced prices of p^x=2and p^y=3,so that your budget constraint is given by: 12=2x+3y What is your utility maximizing combination of x and y? What is your total utility at this point? Sup...
We have assumed that consumption depends only on disposable income. Now suppose that consumptions depend on both disposable income and interest rate. As interest rates increase, consumption decreases. a. If consumption suddenly begins to depend on the in ...
Suppose that no policy is implemented. Write down the budget set and draw it in a graph. Union Aggressiveness : Union aggressiveness is the factor of aggregate supply curve that means it increases the wages and the price of good. It increases the cost of production th...
Suppose that the utility function is u(x,y)=10x0.4y0.4. Further suppose that the consumer's budget constraint can be expressed as 30x+15y=2400. For this consumer, the optimal amount of good y to buy would be what? Consider a consumer whose preferences ca...
In microeconomics, the willingness to pay is the maximum price a consumer is ready to pay to acquire a good or a service. The size of a consumer's willingness to pay affects the amount of consumer surplus.Answer and Explanation: Remember that the consumer ...
Show what happens in you 4. Show graphically what happens to consumption after a fall in permanent income using the indifference curve/budget constraint graph. 5. Show what happens to the consumption demand curve after a fall ...
Suppose your initial wealth is e150 and you have the following log-wealth utility function: lnW where W is the wealth. Suppose the risky asset can either return 20% or lose 10% in every period with equal probability, while the riskless asset's return is 3.92...