What is his optimal consumption bundle

Assignment Help Operation Management
Reference no: EM13968135

Thomas has income of $1500 today and $1000 tomorrow. He can lend and borrow at an interest rate of 10%. There is 10% inflation. 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 increase to 20%, what will be his new optimal consumption bundle? Is he better or worse off?

Reference no: EM13968135

Previous Q& A

  Common type of constraints found in most organizations

The most common type of constraints found in most organizations is: Critical Ratio is: All of the following about S&OP is true except:

  Decided to weight three factors in making the decision

A company is looking to build a new factory. Hartford, CT and Akron, OH are two possible locations and local governments have made pitches to the company for their city. Hartford scores 70 for raw materials, 50 for transportation and 90 for labor. Ak..

  How web analytics are used source of business intelligence

Explain how web analytics are used as a source of business intelligence, and why they are so valuable for understanding customers

  An assertive and people-focused social style

An assertive and people-focused social style is also known as:

  Expected monatary value associated with project effort

Martha has invested $50,000 to carry out work on a contracted project. If she delivers a product on or before a scheduled delivery date, she will be paid $130,000 for her work. If she misses the delivery date, her work will be rejected and she will b..

  Publishers adapted the gross revenue step deal model

Why have record labels and publishers adapted the “Gross Revenue” Step deal model in place of the traditional Theatrical step (Box Office Bumps) deal that had been standard in music clearance for decades?

  Should lennox be liable for the revocation

Carter was a sales representative for Lennox China, Inc. He was given an exclusive territory that included Colorado, New Mexico, Arizona, and Utah. His contract with Lennox was for 2 years. Carter believed that if he had been allowed to finish his co..

  What is your ethical obligation

Virtually any TV show, movie, or song can be downloaded for free on the Internet. Most of this material is copyrighted and was very expensive to produce. Most of it is also available for a fee through such legitimate sites as iTunes. What is your eth..

  Would there be a difference under common law contracts

On May 1, you contract orally with Johnny, a salesperson with Keyboards Emporium, to buy for $450 an electric organ for your personal enjoyment with delivery to occur on July 1. On May 15, you ask for delivery on June 1 and Johnny agrees. But deliver..

  Compensation law to which turner construction appealed fair

The stakes were high for Gene Elliot, whose on-the-job injuries were estimated to be serious enough to merit at least a $2.4 million settlement. But who should pay for his injuries: Turner Construction or B&C Steel? Or should Elliot be forced to pay ..

Reviews

Write a Review

 

Similar Q& A

  How many units should the company order

It has just been determined that the company currently has 42 units on hand. How many units should the company order if it strives to maintain a 99% service level on this item?

  Determine capacity utilization rate for last month

A manufacturing shop is designed to operate most efficiently at an output of 550 units per day. In the past month the plant produced 490 units. What was its capacity utilization rate last month?

  Describe how the perpetual inventory system works

Describe how the perpetual inventory system works. What are some advantages of using the perpetual inventory system? Is it necessary to take physical inventory when using the perpetual system?

  What would you conclude and what disciplinary action

If you were the district's EEOC officer, what would you conclude? What disciplinary action, if any, would you taken?

  Incorrect schedule of the risk management review

Suppose the size of the project was not determined correctly and a large, complex project was defined as a medium project instead. Predict the outcome of the risk management process within this organization. Include examples (i.e., the incorrect sche..

  Single self-serve gas station with six pumps

A competitor is opening a new facility with 12 pumps across town. Table 10.13 shows the travel times in minutes from the four different areas in the community to the sites and the number of customers in each area.

  Identify symptoms that suggest an underlying problem

What alternative solutions should be considered in solving this problem? How did you arrive at these alternatives?4. What are the advantages and disadvantages of these alternatives? Quantify where possible.

  Describe the ethical standards a purchasing manager

Describe the ethical standards a purchasing manager or any employee should maintain. Describe why controlling purchasing expenses is far more critical than increasing sales an equal amount.

  Identify the ip rights that are owned by an organization

Identify the IP rights that are owned by an organization you currently or formerly have worked at.

  Discuss the marketing and supply chain risks and benefits

Discuss the marketing and supply chain risks and benefits related to product complexity

  What is optimal allocation of investment funds among stocks

What is the optimal allocation of investment funds among stocks, bonds, mutual funds, and cash? What is the annual rate of return and the total risk for the optimal portfolio?

  Switch from traditional to integrative bargaining

Why is it difficult for labor negotiators to switch from traditional to integrative bargaining? What recommendations would you make for negotiators trying to make this switch? Why is it more difficult for union negotiators to make this change compare..

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