Calculate the utility of each of the individuals

Assignment Help Microeconomics

Reference no: EM132178284

Question: Suppose the government of the economy in exercise 8 is considering subsidizing credit. Assume that this government works as a social planner, striving to maximize the sum of the utilities of all individuals, net of the cost of subsidies and subject to the bank's break-even constraint. Assuming that the bank charges all borrowers the same interest rate and all loans are therefore equally subsidized, would the government decide to subsidize lending? Calculate the utility of each of the individuals and the social welfare, then compare them with the situation without subsidies in Is subsidization Pareto optimal?

Reference no: EM132178284

Questions Cloud

What makes a smart subsidy different from subsidies : What makes a smart subsidy different from subsidies that have long been used to subsidize rural credit in low-income areas?

How many shares would it purchase : If the underwriter used all its profits from the short position to purchase shares, how many shares would it purchase

Build a login screen which will be passed an id and password : Build a login screen which will be passed an id and password.If the user fails to login in three tries, have them authentic based on their personal information.

Calculate PCD residual income in 2015 : How much would PCD need to decrease total assets in 2016 to achieve its target ROI of 20%, assuming no change in operating income between 2015 and 2016

Calculate the utility of each of the individuals : Suppose the government of the economy in exercise 8 is considering subsidizing credit. Assume that this government works as a social planner.

What feature allows the vm running in the window to appear : What feature allows the vm running in the window to appear as if it is the only operating system running on your computer?

Clients and customers are homogeneous : What should a company do if their clients and customers are homogeneous (all from the same culture or background) and not diverse?

Prepare journal entries required in capital-projects fund : Prepare the journal entries required in both the capital-projects fund and the debt-service fund using the template provided in this module

Display the total of the grades and the classaverage : Create anapp that enables the user to select a file in which to store grades.The app should allow the user to write any number of grades intothat file.

User Account

All Pages