Home / Questions / This question asks you to recall what you know about how we study the choices of individua...
This question asks you to recall what you know about how we study the choices of individual consumers. We will focus on an American tourist consumer in Tehran who must decide how many Persian Rugs (R) and how many ounces of Saffron (S) to purchase. Assume our consumer has complete, transitive preferences over Rugs and Saffron and prefers more to less. Explain in words the meaning of these assumptions. Draw a typical indifference map (set of indifference curves) with Rugs on the Y-axis and Saffron on the X-axis. Explain why the indifference map you drew satisfies the assumptions we have made about the household’s preferences. Define the marginal rate of substitution of Saffron for Rugs, which you may denote MRSS,R. How is the MRSS,R represented on your graph of the indifference curves? Suppose all transactions take place in cash, and our household has W units of cash (W stands for wealth). If the price of Rugs in terms of money is PR and the price of Saffron in terms of money is PS , write the household’s budget constraint (you may use R to denote the number of Rugs purchased and S to denote the ounces of Saffron purchased). Draw the consumer’s budget line on a graph (again, with Rugs on the Y-axis and Saffron on the X-axis). If the tourist maximizes her utility given the limited budget available to it, then the consumer's optimal choice of Rugs and Saffron is the point on the budget line which yields the highest utility. Draw the consumer’s optimal choice. At the optimal choice of the tourist, what is true about the slope of the budget line and the slope of the indifference curve? What does this result tell you about the marginal rate of substitution of Saffron for Rugs and the prices of Saffron and Rugs? Now, suppose that the U.S. introduces a tax on all imports. How would your answer to the last part change? Graphically illustrate the outcome. Suppose that this tax is only on saffron. How does your answer change?
May 04 2020 View more View Less
Typical operational HR functions include legal compliance, processing applications, training supervisors, and answering questions about wages and salaries.32.Strategic HR...
Dec 12 2019What is the price of a call option that expires in 1 year, giving you the right to pay $0.9009 to buy a bond expiring in 1 year? What is the price of an otherwise ide...
Nov 24 2019A wooden beam 100 mm wide d 150 mm deep is supported over a span of 4m. If the shear force at a section of the beam is 4500N. Find the shear stress at a distance 25 mm ab...
May 24 2020You have been hired as a consultant (to your current organization, previous organization, or a fictional organization). Describe and analyze a human resource organization...
Jul 21 2020On April 1, Online Travel issues $12 million of commercial paper with a maturity on December 31 and an 8% interest rate. Record the issuance of the commercial paper and i...
May 17 2020In the following circuit, find the minimum Vin required and the resulting voltage Vout to put the transistor in full saturation. Assume that the beta for the transistor i...
Jul 27 2020Show transcribed image texthapter 18 HW ! You skipped this question in the previous attempt Problem 18-9 Policy on payout ratio [LO18-1) 14 In doing a five-year analysis ...
Aug 07 2020Metronic has $155M in equity and $75M in debt and forecasts $33M in net income for the year. It currently pays dividends equal to 40% of its net income. You are analyzing...
May 11 2021Walter Industries has $5 billion in sales and $1.7 billion in fixed assets. Currently, the company’s fixed assets are operating at 90 percent of capacity.a. What level of...
May 02 2021IntroductionThis is a group activity designed to encourage students to explore the significance of learned professional and technicalskills in the transition from a stude...
May 12 2020