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Mary has two sources of income, let her non - labor income be represented by V dollars per year. He r labor income comes from working h hours per year in the labor market at wage rate of w per hour. Assume that her utility is a function of composite good, C (measured in dollars and priced at $1) and hours of leisure consumed, L (priced at w per hour). As sume her wage rate per hour is $10, her time endowment is up to 2000 hours per year and her non - labor income V is $3000. Below is her specific Utility Function. U = 100*Ln(C) + 125* Ln (L) A. Determine her specific budget constraint equation. Also graphic ally illustrate her budget constraint with C on the y - axis and hours of leisure consumed, L, on the x - axis. Clearly label everything including the intercepts, x - and y - axis and the slope of the budget line. B. Now solve for the optimal consumption bundle for Mary and identify the optimal values for C (C*) and L (L*). C. At the optimum, determine her level of utility. D. Now assume, the government decides that Mary qualifies for a cash grant welfare program where s he would be entitled to $3000 per year. What would this cash grant do to her non - labor income V? How would V and w change? Illustrate the impact of the cash grant on Mary’s choice of optimal bundle graphically. At her new optimum, what would happen to her hours of leisure consumed?
The movement to free international trade is most likely to generate short-term unemployment in which industries?
The yearly demand for coffee by U.S. consumers is given by the demand curve QD=250-10P, where Q is quantity.
From the list below, select the components or inputs associated with the production function where GDP is the output. There is more than one possible answer. Capital deepening, population, physical capital, aggregate supply, aggregate demand.
Your bank has total assets of $220 million and a capital-to-total assets ratio of 7 percent. You learn that your bank’s entire $20 million loan package to Central American nations will be written off as bad loans. Will your bank survive this crisis? ..
Calculate how large A would have to be so that in the new LRCE, the number of firms is twice what it was in the initial equilibrium.
Which one of the following statements is FALSE about a market characterized by the market structure we call duopoly (that is an oligopoly with only 2 firms) under Cournot competition?
To increase tax revenue, the U.S. government in 1932 imposed a 2-cent tax on checks written on bank account deposits. How do you think the check tax affected the currency–deposit ratio? Explain. Use the model of the money supply under fractional-rese..
You are the owner of a family-owned restaurant. You do not pay yourself a salary or an hourly wage. How and why does this practice affect the economic cost of serving your patrons?
Consumption is $6 trillion, investment is $2 trillion and government purchases are $2.5 trillion. The country exports $1 trillion and imports $1.5 trillion. Find net exports and solve for the level of aggregate demand.
Now assume a 7% real discount rate. What would the present discounted value of the project be? Should the project still be approved under this discount rate?
Discuss what happens to equilibrium price and sales. Explain why or why not this makes sense in the real world.
What indictors are evident that there is too much or too little money within the economy? How is monetary policy aiming to adjust this?
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