Home / Questions / Consider an agent who lives for 3 periods and has preferences given by
Consider an agent who lives for 3 periods and has preferences given by u(C1, C2, C3) = (1+0.5702 +0.25/03 The agent has no initial wealth. Its after-tax income is equal to $10,000, $20,000 and $30,000 in period 1, 2, and 3, respectively. Assume that the consumer can freely borrow and lend at an interest rate of 5%. 1. Calculate the optimal level of consumption in each period. 2. Suppose the agent's income increases by $10,000 in period 1. Calculate how consumption in the three periods of life changes in response to this increase in income. Explain your answer. 3. Suppose the agent's income increases by $10,000 in period 3. Calculate how consumption in the three periods of life changes in response to this increase in income. Explain your answer. Why is your answer here different than the answer in the previous example? 4. Suppose the agent's income increases by $10,000 in all 3 periods of its life. Calculate how consumption in the three periods of life changes in response to this increase in income. Explain your answer. Why is your answer here different than the answer in the previous examples?
Feb 07 2020 View more View Less
Alfred Marshall and Leon Walras formalized and then popularized the analytical techniques known as: (a) partial equilibrium analysis and general equilibrium analysis (b) ...
May 05 2021Describe the world you come from — for example, your family, community or school — and tell us how your world has shaped your dreams and aspirations. Prompt #1 (transfer ...
Mar 25 2020You deposit $14,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire.a.If the deposits are made at the beginning of the year...
May 15 2021Frank Pepe's Pizzeria Napoletana has opened one of the most recognizable pizzerias in the United States using word of mouth (WOM). After returning from World War I, Frank...
Jul 05 2021Use proofreading marks to capitalize ( ≡ ) or to show lowercase ( / ) letters in the following sentences.The homestead act was passed in 1862 to encourage Westward Expansion.
Jul 20 2021Improving the power factor means making it (2 Points) close to unity zero less than 0.5 none of the above
May 02 2021When an automobile rounds a curve at high speed, the loading (weight distribution) on the wheels is markedly changed. For sufficiently high speeds the loading on the insi...
May 19 2020In the basic Keynesian model (Y =C+I+G ), a $ 1 billion decrease in autonomous consumption leads to ---------in the short run equilibrium output A. no change B. a $1 bill...
Jun 07 2021Give three examples of gaseous elements that exist as diatomic molecules. Give three examples of gaseous elements that exist as monoatomic species.
Jun 21 2021The base year in the consumer price index (CPI) is:A. given a value of zeroB. a year chosen as a reference for prices in all other yearsC. always the first year in the cu...
Jun 15 2018