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Harper is spending a three-day weekend at a beach property. Upon arrival, Harper bought a quart of ice cream and must divide consumption of the quart over each of the three days. Her instantaneous utility of ice cream consumption is given by u(c)=c^0.5, where c is measured in quarts, so that the instantaneous marginal utility of consumption is given by 0.5c^(-0.5). Suppose Harper discount future consumption according to the fully additive model, with the daily discount factor δ=0.8. Solve for the optimal consumption plan over the course of the three days by finding the amounts that equate the discounted marginal utility of consumption for each of the three days, with the amounts summing to 1. Now suppose that Harper discounts future utility according to the quasi-hyperbolic discounting model, with β=0.5 and δ=0.8. Describe the optimal consumption plan as of the first day of the weekend. How will the consumption plan change on day two and day three? (quasi) The model thus far eliminates the possibility that Harper will purchase more ice cream. In reality, if the consumption on the last day is too low, Harper might begin to consider another ice cream purchase. Discuss the overall impact of
The scholarship is to provide $5,000 the first year increasing by $500 each year thereafter to a maximum of $10,000 per year. On the assumption that the scholarship will start at the end of the first year and continue forever, what endowment must ..
Suppose which gross private domestic investment is $800B also the government is currently running over a $400B deficit.
A monopolist faces a market demand curve given by: Q = 70 – P. This monopolist perfectly price discriminates among its customers. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, the monopolist’s profits are equal ..
Determine the optimal number of plants that the firm should have to take full advantage of the market demand. Calculate the firm's profit.
Referring to expanse on of intra-industry trade and provide critical evaluation (benefits and costs) of FDI incentives on production structure and on development of a host country in Asia in terms of employment and income generation. Comment on the r..
Suppose an investment broker contacts you with the following information. “Opportunity, Inc. is currently selling for $5 a share. I just found out that the company has discovered a cure for cancer. Its price is sure to triple in three months.” How sh..
q1. as long as firms are price takers in the labour market it doesnt matter if firms are monopolists in the output
In the case of a perfectly price-discriminating monopoly, there is: On Black Fridays, most retail outlets have major storewide sales. Yet, as one of the busiest shopping days in the United States, one would expect prices to increase, not decrease. P..
Illustrate what wage would a monopoly union demand Explain how many workers would be employed under union contract.
Illustrate what is the macroeconomic relationship with the article, "Squaring the Economic Circle" by Art Buchwald.
what is the diamonds water paradox and how is it
A city that is attempting to attract a professional football team is planning to build a new stadium costing $500 million. Annual upkeep is expected to amount to $1,000,000 per year. what will be its capitalized cost at an interest rate of 10% per ye..
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