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Imagine a consumer with the following budget constraint C = −20l + 60
whereh=24andπ−T =120.
(a) Plot the budget constraint in a (l,C)-diagram, computing the intercepts.
(b) What is the slope of the budget constraint?
(c) Imagine that taxes increased by 10 (consumption goods) and plot the new budget constraint. Draw arbitrary indifference curves (satisfying the usual assumptions) and use these to show how the increase in taxes affects the consumer’s optimal choice and her labor supply curve. Explain your results in terms of income and substitution effects.
(d) Imagine now instead that the wage fell to 10 (consumption goods per hour worked) and plot the new budget constraint. Draw arbitrary indifference curves (satisfying the usual assumptions) and use these to show how the increase in the wage affects the consumer’s optimal choice, and the implications for her labor supply curve. Explain your results in terms of income and substitution effects.
Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, illustrate what was the real interest rate you paid.
A new oil pump costs $9000 and has no salvage value once installed. Also operating expenses for the pump will be $500 the first year and will increase on a $500 arithmetic gradient in the following years. If the interest rate is 8%. compute the pump'..
Describe the determinants of varying levels of income. What factors determine a wages of a person
Which of the below transaction(s) are included in the GDP calculations for the Year of 2012?
Illustrate what is the basic objective of monetary policy. What are the major strengths of monetary policy.
Should food and beverage advertising to children be banned? What about for other types of products as well? Is it unethical for food companies to target their ads towards children? In a period when most parents are working, how are children to be pro..
You have been chosen to create an e-commerce program to the board of directors. Present your argument on why senior management should buy into your e-commerce program.
Let’s say the current administration decides to make a college education more affordable, so they establish a price ceiling of $50 per credit hour for community colleges, $75 per credit hour for four year institutions, and $100 per credit hour for gr..
In Project 1 you addressed the problem of selecting specific metrics or measuring sticks that one might want to review and analyze in order to assess the performance of the U.S. macroeconomy.
Please use this discussion board to describe the events that characterized the onset and deepening of the financial market.
For the product is charging the most favorable price
By spending $20K now, $25K three years from now, and $30K five years from now to upgrade presently owned equipment, a company can increase its annual revenue by $15K in years 1 through 5 and by $18K per year in years 6 through 10. At an interest rate..
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