« previous next »

Author Question: Jose gets utility from the goods he consumes and also the income he earns. His utility function is ... (Read 83 times)

kellyjaisingh

  • Hero Member
  • *****
  • Posts: 540
on: Jul 1, 2018
Jose gets utility from the goods he consumes and also the income he earns. His utility function is given by U(q1,q2 ) = q1q2Y Derive Jose's demand equations.
 
  Does the fact that he derives utility directly from income affect his consumption in this case?

Question 2

An investment is profitable as long as its internal rate of return is equal to the rate of interest.
 
  Indicate whether the statement is true or false


milbourne11

  • Sr. Member
  • ****
  • Posts: 322
Reply #1 on: Jul 1, 2018
Answer to Question 1

The demand equations are
qi = Y/2pi
because income is a scalar of his utility and not chosen by Jose; it has no influence on his optimal bundle.

Answer to Question 2

False. Such an investment has a profit of zero. The investment is profitable if the internal rate of return exceeds the interest rate.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Though “Krazy Glue” or “Super Glue” has the ability to seal small wounds, it is not recommended for this purpose since it contains many substances that should not enter the body through the skin, and may be harmful.

Did you know?

Although not all of the following muscle groups are commonly used, intramuscular injections may be given into the abdominals, biceps, calves, deltoids, gluteals, laterals, pectorals, quadriceps, trapezoids, and triceps.

Did you know?

The first oral chemotherapy drug for colon cancer was approved by FDA in 2001.

Did you know?

Symptoms of kidney problems include a loss of appetite, back pain (which may be sudden and intense), chills, abdominal pain, fluid retention, nausea, the urge to urinate, vomiting, and fever.

Did you know?

Human kidneys will clean about 1 million gallons of blood in an average lifetime.

Global Stratification: Income of the World's Nations Global Stratification: Income of the World's Nations
A utility knife uses replaceable blades and can cut carpet and other materials. A utility knife uses replaceable blades and can cut carpet and other materials.
How to transform the natural exponential function (e^x) How to transform the natural exponential function (e^x)
Model for translocon function Model for translocon function
Algebraically determine the x intercept of the exponential function Algebraically determine the x intercept of the exponential function
Structure and function of the gills of a bony fish. Structure and function of the gills of a bony fish.
Video: Complement Proteins Animation

For a complete list of videos, visit our video library