Consider a household with wealth of $62,000. If the price level decreases by 8%, this household is expected to its consumption because of the decrease; deflationary effect. decrease; wealth effect increase; wealth effect decrease; income effect increase; interest rate effect
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- Find APC if consumption is $300 and income is $3000Kevin has a wage income of $10,000 in the present and $15,000 in the future. His utility is given as U = min (4cp, 5cf), where cp denotes consumption today and cf consumption in the future. The relevant interest rate is 10%. a. If the interest rate were to increase to 15 percent,would Kevin be better off or worse off? Explain. b. Find two measures to indicate how much better off or worse off Kevin is as a result of the increase in interest rates. Explain.Suppose Marcus eats nothing but burritos for dinner. He buys 30 burritos each month. During the last couple of weeks, Marcus noticed a decrease in the price of burritos. The price of burritos fell from $6.00 per burrito last month to $5.75 per burrito this month. Assume that Marcus has a fixed income of $180 that he can spend on burritos. How many burritos can Marcus afford to buy at the new price of $5.75?
- Wherein:TU = Total Utilityf= is a function ofMU = Marginal UtilityO = units of consumptionA= infinitesimal change EMV= Expected Monetary ValueAccording to the Permanent Income Hypothesis (PIH), what should a consumer do if she receives news that she will be demoted next year (and her salary will be halved)? Draw the paths of income and consumption for this consumer.iii. Dr. Abida is planning for her requirement. Suppose she can consume her salary of Rs. 200,000 while she is in service or save her salary to consume it after retirement. When she saves her salary, she will get 8% interest on it. Draw Dr. Abida’s budget constraint, her indifference curve and her optimum. If interest rate goes up to 15%, draw figures to show when she will save more and when she will save less.
- Ross is a senior citizen who consumes food and health care. When he retired in 2002, he consumed 90 meals and 3 medical checkups per month. Suppose in 2002 that the price of a meal was $10 and the price of a medical checkup was $73. However, in 2012, the price of a meal is $11 and the price of a medical checkup is $285. As a result, Ross consumes 100 meals and 2 medical checkups per month. Calculate a Laspeyres cost-of-living index for Ross using 100 as the base in 2002. In particular, the Laspeyres index for 2012 is (Enter your response rounded to two decimal places.)Dr. Farida is planning for her requirement. Suppose she can consume her salary of Rs. 100,000 while she is in service or save her salary to consume it after retirement. When she saves her salary she will get 10% interest on it. Draw Dr. Farida’s budget constraint, her indifference curve and her optimum. If interest rate goes up to 20%, draw figures to show when she will save more and when she will save less.Find consumption of income is $390 and APC is 0.34
- Ruth is a senior citizen who consumes food and health care. When she retired in 2002, she consumed 90 meals and 3 medical checkups per month. Suppose in 2002 that the price of a meal was $10 and the price of a medical checkup was $69. However, in 2012, the price of a meal is $11 and the price of a medical checkup is $297. As a result, Ruth consumes 100 meals and 2 medical checkups per month. Calculate a Laspeyres cost-of-living index for Ruth using 100 as the base in 2002. In particular, the Laspeyres index for 2012 is 169.92 (Enter your response rounded to two decimal places.) The Laspeyres index suggests inflation has been 69.92 percent over the 10-year period from 2002 to 2012. (Enter your response rounded to two decimal places.) Next, calculate a Paasche cost-of-living index for Ruth using 100 as the base in 2002. In particular, the Paasche index for 2012 is (Enter your response rounded to two decimal places.)In a given economy where citizens spend 80% of each additional dollar of income, the government increases its purchases by $2400. Calculate the total change in income (Y) that results. Carefully follow all numeric directions. Use a negative number to indicate a decrease in Y and a positive number to indicate an increase.Consumer's utility function for consumption in two periods is c1+30ln(c2). The interest rate is r, the income in the first period is 10, the income in the second period is 50. What is the formula for the demand for second-period consumption?
