= Y and a period . The individual faces a budget constraint in period 1 of P₁c₁ + $₁ 2 budget constraint of P₂c₂ = (1+r)s₁. Interpret each of these two constraints in words.
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- On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according tothe functionU(c, b) = 20c− c²+ 18b − 3b²a. How many cigars and glasses of brandy does he consume during an evening? (Cost isno object to J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum ofglasses of brandy and cigars consumed to 5. How many glasses of brandy and cigarswill he consume under these circumstances?Use the black line (plus symbols) to plot the line illustrating the combinations of salad and pizza that Andrew can purchase with a budget of $30.00. PIZZA (Slices) 14 12 10 00 4 2 O to 0 2 4 8 8 SALAD (Bowls) 10 12 14 Initial Budget New Budget ? Now suppose Andrew's income is cut in half: That is, he has 50% less money to spend than he did before. On the previous graph, use the blue line (circle symbols) to plot Andrew's new budget constraint. Which of the following statements best summarizes the pattern of causality captured by the graph above? Check all that apply. The relationship between S and P is not a causal relationship. A change in E causes a shift of the budget constraint. A change in S causes a change in P. A change in P causes a change in S.Kenji is buying salad and pizza for a company lunch. Suppose that a bowl of salad costs $3.00, and a slice of pizza costs $4.00. Let E be the amount in dollars that Kenji spends on salad and pizza. If Kenji buys S bowls of salad and P slices of pizza, then the total amount of money he spends (E) can be represented by the equation Now rearrange the equation you wrote above so that P is written in terms of E and S. The quantity of pizza he buys can be represented by the equation Suppose Kenji has $48.00 to spend on salad and pizza; that is, E= $48.00. Complete the following table with the values of S or P that make the equation true. Hint: To complete the first row, determine the number of pizza slices Kenji can purchase with $48.00, when the number of salad bowls he purchases is 0. Pizza Budget Salad (Dollars) (Bowls) (Slices) 48.00 0 48.00 48.00 8 0
- Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c', and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lenders.In 2005, suppose a typical U.S. owner of a home theater (a television and a DVD player) bought 16 music CDs (9₁) per year and 18 top-20 movie DVDs (9₂) per year. The average price of a CD was about p₁ = $15, the average price of a DVD was roughly p2 = $20, and the typical consumer spent $600 on these entertainment goods. We'll call this typical consumer Barbara. We estimate her Cobb-Douglas utility function as 9₂ 10.49₂ 0.6 U(91, 92) = 91 Use the 3-point curved line drawing tool to draw Barbara's annual demand curve for CDs, using prices of $15, $30, and $60 as your control points. Carefully follow the instructions above, and only draw the required object. (...) p, price per CD 70- 65- 60- 55- 50- 45- 40+ 35- 30- 25- 20- 15- 10- 5- 0- 0 10 12 Quantity, CDs per year 8 14 16 18Carol needs to decide how to spend her wealth on sh and chicken.For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preferences2Intermediate Microeconomics NYUAD, Spring 2023can be represented by the utility functionu(x; y) = 2x + ywhere x is the quantity of sh (in lbs) and y is the quantity of chicken(in lbs). The consumption set is R2+.(a) Draw two typical indi erence curves for Carol, one correspondingto a utility level of u1 and one corresponding to a utility level u2,where 0 < u1 < u2. Make sure you label the slope of the indif-ference curves and the intercepts with the horizontal and verticalaxes.(b) Suppose the price of sh is $1:5 per lb and and the price of chickenis $1 per lb. Carol has $20 to spend on sh and chicken.(i) Draw Carol's budget set, labeling the slope and the interceptpoints clearly.(ii) How much sh and chicken will Carol choose to purchase?
- Seung's utility function is given by U - C^(1/2), where C is consumption and C^(1/2) is the square root of consumption. She makes $50,625 per year and enjoys jumping out of airplanes. There's a 5% chance that in the next year, she will break both legs, incur medical costs of $30,000, and lose an additional $5,000 from missing work. a. What is Seung's expected utility without insurance? b. Suppose Seung can buy insurance that will cover the medical expenses but not the forgone part of her salary. How much would an actuarially fair policy cost, and what is the expected utility if she buys it? Policy cost: $___ Expected utility: ___ c. Suppose Seung can buy insurance that will cover her medical expenses and foregone salary. How much would such a policy cost if it's actuarially fair, and what is her expected utility if she buys it? Policy cost: $___ Expected Utility: ___Kenji is buying pizza and salad for a company lunch. Suppose that a slice of pizza costs $2.00, and a bowl of salad costs $4.00. Let E be the amount in dollars that Kenji spends on pizza and salad. If Kenji buys P slices of pizza and S bowls of salad, then the total amount of money he spends (E) can be represented by the equation Now rearrange the equation you wrote above so that S is written in terms of E and P. The quantity of salad he buys can be represented by the equation Suppose Kenji has $32.00 to spend on pizza and salad; that is, E= $32.00. Complete the following table with the values of P or S that make the equation true. Hint: To complete the first row, determine the number of salad bowls Kenji can purchase with $32.00, when the number of pizza slices he purchases is 0. Budget Pizza Salad (Dollars) (Slices) (Bowls) 32.00 0 32.00 8 32.00 00 0Tim is buying pizza and salad for a company lunch. Suppose that a slice of pizza costs $4.00, and a bowl of salad costs $5.00. Let ♬ be the amount in dollars that Tim spends on pizza and salad. If Tim buys P slices of pizza and S bowls of salad, then the total amount of money he spends (B) can be represented by the equation Now rearrange the equation you wrote above so that S is written in terms of E and P. The quantity of salad he buys can be represented by the equation Suppose Tim has $40.00 to spend on pizza and salad; that is, E = $40.00. Complete the following table with the values of P or S that make the equation true. Hint: To complete the first row, determine the number of salad bowls Tim can purchase with $40.00, when the number of pizza slices he purchases is 0. Budget Pizza (Dollars) (Slices) 40.00 0 40.00 5 40.00 Use the black line (plus symbols) to plot the line illustrating the combinations of pizza and salad that Tim can purchase with a budget of $40.00. SALAD (Bowis) 14…
- Amadea spends all her income on pizza,chocolate milk, and music streams. The price of pizza is $4 per slice and price ofchocolate milk $2 per bottle. At Amadea's current consumption level, her marginalutility for pizza is 50 units per slice and for music 100 units per stream. Assuming thatAmadea is a utility maximizer, how much is (a)her current marginal utility for a bottleof chocolate milk, and (b) the price of streams she buys. Show your work. [Hint: Ch 6:Utility-maximizing formula)The consumer choice is not restricted to the choice of consumptiongoods. In fact, it can apply to all our decisions that involve trade-offs. Suppose Mary has awage per hour of 10 euros. With her earned income she consumes. That isC=wH per day.She also decides how many hours to work of take leisure time each day.H=24-N, whereHis work and N is leisure. Her utility is given by (picture) Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif-ferent curve. What is the labor supply function?January is choosing how much of pudding (measured on the horizontal axis) and how much of meat (measured on the vertical axis) to purchase with limited budget of $100. The price of pudding is $1.25 per pound and the price of meat is $3.75 per pound. Suppose the consumer wants to purchase the consumption bundle (20,40). This consumption bundle will be attainable O None of the other alternatives are correct O unattainable O efficient