Representative consumers preferences change

Assignment Help Business Economics
Reference no: EM13861539

Suppose that the representative consumer's preferences change, in that his or her marginal rate of substitution of leisure for consumption increases for any quantities of consumption and leisure.

(a) Explain what this change in preferences means in more intuitive language.

(b) What effects does this have on the equilibrium real wage, hours worked, output, and consumption?

(c) Do you think that preference shifts like this might explain why economies experience recessions (periods when output is low)? Explain why or why not, with reference to the key business cycle facts in Chapter 3

Reference no: EM13861539

Previous Q& A

  Domestic investment in economy

If domestic investment in an economy is smaller than the economy's private domestic savings

  What is the probability that a single service call takes

What is the probability that a single service call takes between 50 and 70 minutes? The probability is 0.025 that a single service call takes more than how many minutes?

  Conspicuous consumption refers

Conspicuous consumption refers to:

  Identify the burnham or sullivan inspired elements

Identify the Burnham or Sullivan inspired elements of what you are writing about. What are some of the details that we've talked about in class that you see while we are out in the field

  Is free trade always good policy

Is free trade always a good policy? Using Paul krugman's "is free trade passé?" And bhagwati's paper on labor and environmental standards, comment on the status of US free trade policy. Make sure to add your opinion on NAFTA. In what ways can nafta h..

  Most important source of local tax revenue is income tax

About one out of every ten dollars of federal government spending goes toward interest on the national debt. Over one out of every three dollars of federal tax revenue comes from social insurance receipts. The most important source of local tax reven..

  Does this event increase or decrease demand-supply

Does this event increase or decrease demand and/or supply? How does this change in demand and/or supply affect the equilibrium prices and quantity in the market? In other words, do they increase or decrease? Find the new equilibrium and compare it wi..

  Find equation for indifference curve through bundle

Suppose Alan’s preferences are described by the utility function: Find Alan’s MRS. Find the equation for Alan’s indifference curve through the bundle (3, 6).

  Determine the premium of the european call option mentioned

A European call option allows one to purchase 2 shares of stock B with 1 sare of stock A at the end of a year. A European put option which allows one to sell 2 shares of stock B for 1 share of stock A costs 11.5. Determine the premium of the European..

  Continuously compounded risk-free interest rate

A stock is projected to pay a dividend of $3 in 1 month. A three month at-the-money European put option on the stock has a premium that is $2.751 higher than the premium for a three-month-at-the-money European call option on the stock. The continuous..

Reviews

Write a Review

 

Similar Q& A

  Assume the demand for dollars increases

Illustrate what is the value of the equilibrium exchange rate. Assume the demand for dollars increases by 300 billion at each exchange rate.

  The amount budgeted for advertising spending

What is the numerical value of the partial derivative of the function with respect to advertising spending (be sure to also include the + or – sign, but I do not want the symbol for this)? The amount budgeted for advertising spending is cut by $100,0..

  What is the book value at the end of year

An MRI machine in a MD's office is MARCS 5-year property. It costs $258,679 and has an expectes useful life of 6 years, at which point, the salvage value is expected to be $2,753. Assuming MACRS depreciation, what is the book value at the end of 6 ye..

  Market for qbits is initially competitive and market demand

The market for qbits is initially competitive and the market demand is: P = 400 - 0.4Qd. The combined marginal costs of the firms in the qbit industry are: MC = 50 + 0.6Q. Draw the demand, and marginal cost curves. Calculate and show how much these f..

  Illustrate what would they approximate marginal propensity

If se economists ignore possibility of crowding out, illustrate what would they approximate marginal propensity to consume (MPC) to be

  Two firms compete simultaneously in quantities

Suppose that two firms compete simultaneously in quantities. The inverse demand function is given by P = 12 - Q where Q = Q1 + Q2 is the sum of the quantities produced by firms 1 and 2 respectively. Assume also that these firms have NO COSTS. If firm..

  Elucidate what happen in the short run to market supply

Elucidate what happen in the short run to market supply and demand curves, market price, the firm's output, the firm's profit.

  Illustrate what level of q maximizes profit of recycling

AMS recently instituted an in-house recycling program. Profits of this program include not only profits to environment of recycling. Illustrate what level of Q maximizes profit of recycling.

  Bulls eye department store specializes in the sales of

Bulls Eye department store specializes in the sales of discounted clothing, shoes, household items, etc. similar to the offerings at a regular Walmart or Target. Bulls Eye is the only department store in Show Low and the nearest other discount retail..

  Bertrand price competition

The two firms have the same demand curve P=100-4Q, Marginal cost of Firm 1 is 5 and for firm 2 is 10.

  Discuss how production based on comparative advantage

Discuss how production based on comparative advantage can increase domestic employment in India.

  What information would a government needs to increase

What information would a government needs to increase the probability that its industrial policy would promote long-term self-generated economic growth.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd