a. As the interest rate rises, does the intertemporal budget constraint become steeper or flatter? b. Would the assumption that goods are perfect substitutes be valid in a study of intertemporal food purchases?
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- 1. How does a consumer’s optimal choice of goods change if all prices and the consumer’s income double? (Hint: focus on the budget constraint) 2. Output is produced according to a production process given by: Q = 4LK, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $10 and the price of L is $5, then what is the cost-minimizing combination of K and L capable of producing 32 units of output?Refer to Figure 1. Which of the following is TRUE about the slope of the budget constraints? a) ED = CDb) CD = CBc) CD = ABd) No correct answer.Macroeconomics is concerned with the study of the nation-wide market for specific goods like oranges. 1) True 2) False
- Let's incorporate the labor-leisure trade-off and capital income taxes in the two-period model. Let c₁, c₂ be consumption in two periods, I the number of hours worked, Te Te the proportional taxes on consumption in 2 periods, s the saving rate, w the wage rate, b pension in the 2nd period, and 7, the tax on savings (capital income tax). The household's maximization problem in this case is: given by maxe₁,e2,8,1-1 log(c₁) + log (1-1)+5log (c₂) such that (1+T₂) C₁+8 = (1-7)wl and (1+T₂)C₂ = [1+r(1-Ts)]s+b, where measures how the household values leisure vis-a-vis consumption.a) i)Explain difference between; ii,Microeconomics and macroeconomics iiiPositive and Normative economics b) Given the following demand and supply functions as; i)Find the price elasticity of demand and price elasticity of supply at the equilibrium point. ii)Based on the values obtained from Price elasticity of supply in (i) above, what advice would you give to the producer if he is to increase revenue? iv)Using illustrations, distinguish between Minimum and maximum price v)Assuming the government, set the price at 45shs, determine whether its minimum or maximum price, and state the surplus or deficitGood Y H A E F BC1 BC2 D Good X Describe what would cause the budget constraint to shift from BC1 to BC2.
- Question 2.A write a short note about the following variables and support your answers by giving examples for each variable: TFC: TC: VC:Assume that Smith deposits $150 in currency into her checking account in the XYZ Bank. Later that same day, Jones negotiates a loan for $900 at the same bank. In what direction and by what amount has the supply of money changed? Multiple Choice A) increased by $900 B) decreased by $150 C) increased by $1,050 D) increased by $150K C New tab google classroom - Search X https://k12.instructure.com/courses/742205/quizzes/1275322/take Question 5 X Classes Which of the following statements is TRUE? Question 6 * | a gmail - Search × | Assignment Graded: Scard X Quiz: MC Quiz (Ch. 2) A Attending college is a case where the ____ exceeds the monetary cost. X A budget constraint shows the limits on an individual's consumption, while a production possibility frontier shows the limits on a business' consumption or expenses. + X O A budget constraint illustrates increasing opportunity cost, while a production possibility frontier illustrates constant opportunity cost O A budget constraint shows the limits on an individual's consumption, while a production possibility frontier shows the limits on an economy's production. O A budget constraint is a straight line, while a production possibility frontier has a constant slope 10
- Identify each of the following topics as being part of microeconomics or macroeconomics: the effect of a change in the price of Coke on the purchase of Pepsi. (a) microeconomics (b) macroeconomicsAn endogenous variable is a variable explained by an economic model. An exogenous variable is a variable that is taken as given and is not explained by an economic model. True O FalseSean budgets $30 per week for transportation. To get around, he can either drive his car (D) or take the city bus (B). The cost/trip for driving is $5 (PD) while the cost/trip for the bus is $2 (PB). Sean's Transportation Budget a. Driving 15 10 5 5 10 15 Bus Write down Sean's budget constraint given the information above. Graph the budget constraint as well using the graph above. Be sure to label it as BCI on the graph. b. Instead of paying per ride, Sean can also buy a weekly pass. The weekly pass costs a flat fee of $10 and is good for 7 rides. If Sean chooses to use the bus for any rides beyond those seven, he faces the normal price of $2/ride. Write down Sean's Budget constraint and graph it using the same figure above. Label as BC2. [Hint: Remember, Sean only pays the flat fee if he takes any trips, it does not apply if he only uses his car!]