Draw jackies budget constraints in given cases

Assignment Help Financial Management
Reference no: EM131199034

Jackie spends her money on food and all other goods. Right now, she has an income of $600 per month. Compare two alternative welfare programs in which she could participate: program A would provide her with a monthly check of $300, and program B would provide her with $400 a month in credits that can be spent only on food.

a. Draw Jackie's budget constraints in each of these two cases.

b. Draw representative indifference curves that would reflect each of these three scenarios:
(i) Jackie prefers program A to program B.

(ii) Jackie prefers program B to program A.

(iii) Jackie is indifferent between the two programs.

Reference no: EM131199034

Questions Cloud

Draw a representative indifference curve for each mother : Draw the set of hours worked and consumption combinations that these mothers face .- Draw a representative indifference curve for each mother.
Compute the bond yield to maturity today : The bond has a $1,000 maturity value and a coupon rate equal to 7 percent, and it matures in eight years. Interest is paid annually. Compute the bond's yield to maturity today.
What would you say if you were the professor : Might Wilson's failing the quiz have anything to do with the price of parking? Explain your answer.
Net proceeds from the sale of a bond : What are the net proceeds from the sale of a bond? What are flotation costs, and how do they affect a bond's net proceeds?
Draw jackies budget constraints in given cases : Draw Jackie's budget constraints in each of these two cases. - Draw representative indifference curves that would reflect each of these scenarios: - Jackie prefers program A to program B.
Compares alternative techniques for supply restriction : An alternative approach (followed today for tobacco and alcohol) is to tax the goods heavily. Using the tax apparatus developed in Chapter 4, show how this reduces the total income of the suppliers in the drug industry.
What is the forward price of gold : (a) What is the forward price of gold with delivery in 3 months? (b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%. (c) Compare th..
Analyze whether or not company should continue manufacturing : Analyze whether or not the company should continue manufacturing in Canada or if it should move back to the United States. This requires research into transportation cost estimates from Colorado to Toronto.
How is monetary policy useful if money is neutral : Discuss the statement "Because neither fiscal nor mon- etary policy can affect the natural level of output, it follows that, in the medium run, the natural level of output is in- dependent of all government policies."

Reviews

Write a Review

Financial Management Questions & Answers

  Bonds make semiannual payments

Sqeekers Co. issued 11-year bonds a year ago at a coupon rate of 8.9 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 7.2 percent, what is the current bond price?

  Major diference between an option and futures contract

Discuss the generalization that an option's time premium is positive. What is the major diference between an option and a futures contract?

  How does this change your overall return on investment

Suppose you invest $10,000 in a savings account earning 2% interest (compounded yearly) with no risk. After 7 years, how much will you have? but this time there is an inflation rate of 4%. How does this change your overall return on investment?

  What is the projects payback

Project K costs $35,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 9%. What is the project's payback?

  What is the MACRS-GDS property class

A high-precision programmable router for shaping furniture components is purchased by Henredon for $180,000. It is expected to last 12 years. Calculate the depreciation deduction and book value for each year using MACRS-GDS allowances. What is the MA..

  What was the stock return for the missing year

You find a certain stock that had returns of 15.4 percent, –22.7 percent, 28.7 percent, and 19.7 percent for four of the last five years. Assume the average return of the stock over this period was 13.40 percent. What is the standard deviation of the..

  Face value bonds-what is the yield to maturity

The $1,000 face value bonds of Jasper International have a 7.5 percent coupon and pay interest annually. Currently, the bonds are quoted at 98.27 and mature in 3.5 years. What is the yield to maturity?

  What is the formula for the intrinsic value of a call

What is the formula for the intrinsic value of a call? What was the intrinsic value of the Dec. 118 call? Was this option “in the money” or “out of the money”? What was the time value of this option?

  Beta of stock

A stock has an expected return of 12.2 percent, the risk-free rate is 4 percent, and the market risk premium is 10 percent. What must the beta of this stock be?

  Tax-deferred individual retirement arrangement

Retirement planning Hal Thomas, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,000 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will ea..

  Planning to save for retirement

You are planning to save for retirement over the next 25 years. To do this, you will invest $700 a month in a stock account and $300 a month in a bond account. The return of the stock account is expected to be 9 percent, and the bond account will pay..

  Arithmetic average return on crash-n-burns stock

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 17 percent, –4 percent, 20 percent, 12 percent, and 10 percent. What was the arithmetic average return on Crash-n-Burn’s stock over this five-year period..

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