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Thomas has income of $1500 today and $1000 tomorrow. He can lend and borrow at an interest rate of 10%. There is 10% inhalation. His preferences for inter temporal consumption are represented by the following utility function U (c1 ; c2 ) = c1 + c2 .
(a) Write down the equation for his inter temporal budget constraint (c1 is his consumption today and c2 is his consumption tomorrow), graph it and label his endowment and the intercepts on each axis.
(b) What is his optimal consumption bundle?
(c) If interest rates increases to 20%, what will be his new optimal consumption bundle? Is he better or worse o§?
Compare also contrast the yields also maturities for each of the securities. Argue elucidate which you would hold also Elucidate why relative to interest rate risk.
Consider two firms facing the demand curve P = 50 - 5Q where Q = Q1 +Q2 . The rms cost functions are C1 (Q1 ) = 20 + 10Q1 and C2 (Q2 ) = 10 + 12Q2. If they collude, how much will each firm produce? What would be each firm's profit?
Compute another firm in a competitive industry that faces a market determined price of $25. the firm is producing 10,000 units of output, and average total cost, which at its minimum value, is $25. Answer part a for this firm
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Construction-based business of your choice and explain stakeholder theory to illustrate the primary interests of the stakeholder groups and identify any areas of potential conflict between the stakeholder groups.
Luke has $16 to spend on his lunch at his school cafeteria every week. A slice of pizza (P) costs $2 and a submarine sandwich (S) costs $4. Luke likes an average more than extremes. Draw an indifference curve diagram (place pizza on the horizontal ax..
Contract law requires proof that the offeree 'intended' to accept the offer. It is not an uncommon defense for the offeree to allege that she did not intend to accept the offer. How would an offeror prove that the offeree did was bound by the offer a..
Why might even a well-maintained, profitable motel shut down in the long run if the land on which it is located becomes extremely valuable due to surrounding economic development.
Median length of stay was 1.1 days shorter when a hospitalist cared for a Medicare patient. Median cost per case was $853 less (excluding physician fees). There were no significant differences in mortality, 30-day readmissions, or transfers. Hospital..
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