Solution) Chris’s utility from present consumption (CP) and future consumption (CF) is U=CPCF. Chris has an in
Question: Chris’s utility from present consumption (CP) and future consumption (CF) is U=CPCF. Chris has an income of $100 today, and will have no income (aside from the current savings and accrued interest) in the future. The interest rate is 10% on which a 30% tax is levied.
a) What is the future value of $1 of consumption?
b) What is Chris’s constraint on future consumption, in terms of present consumption?
c) How much will be consumed today and in the future, under optimal conditions? Sketch this constraint and the optimal point.
d) To encourage savings, the president eliminates the tax on Chris’s interest income. Will this policy be successful? What changes under this policy?
Explain the net effect of this policy in terms of incoMeand substitution effects.
Solution:
Solution Format: Word Document
-
[Solution] A firm has a short-run production function defined by: Q = -.02L2 + 8L What is the short run demand #6529
-
Solution: You are a manager in a perfectly competitive market. The price in your market is $35. Your total cos #9505
-
(Solved) The following data are June 2003 to June 2004 commodity price index for a category of goods: 142, 13 #19095
-
(Solved) Healthy Harry’s juice Bar has the following cost schedules: Q (vats) Variable cost Total cost #26466
-
Math Help
-
Math and Statistics Answers
