1.Suppose you have a budget of 450 dollars for one month.You would like to buy some textbooks and CDs.The average cost of a book is 55 dollars each and that of a CD is 16 dollars each.Let x denote the number of books you buy and y denote the number of CDs that you buy.Write ...
Suppose that a person's preferences can be described by the utility function U = q_{1}^{\beta} q_{2}^{1 - \beta} where 0 less than \beta less than 1 . They have income Y and face prices p1 and p2. T a) Suppose a consumer has a utility fun...
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 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? Suppose...
Answer to: Suppose that no policy is implemented. Write down the budget set and draw it in a graph. By signing up, you'll get thousands of...
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 ...
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...