« previous next »

Author Question: Jose gets utility from the goods he consumes and also the income he earns. His utility function is ... (Read 75 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?

The newest statin drug, rosuvastatin, has been called a superstatin because it appears to reduce LDL cholesterol to a greater degree than the other approved statin drugs.

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

Acute bronchitis is an inflammation of the breathing tubes (bronchi), which causes increased mucus production and other changes. It is usually caused by bacteria or viruses, can be serious in people who have pulmonary or cardiac diseases, and can lead to pneumonia.

Did you know?

Signs and symptoms of a drug overdose include losing consciousness, fever or sweating, breathing problems, abnormal pulse, and changes in skin color.

Did you know?

For about 100 years, scientists thought that peptic ulcers were caused by stress, spicy food, and alcohol. Later, researchers added stomach acid to the list of causes and began treating ulcers with antacids. Now it is known that peptic ulcers are predominantly caused by Helicobacter pylori, a spiral-shaped bacterium that normally exist in the stomach.

Passive stretching enhances joint function. Passive stretching enhances joint function.
Structure and function of complex I (NADH–coenzyme Q reductase) Structure and function of complex I (NADH–coenzyme Q reductase)
Relationship between Income Inequality and the Desired Tax Rate Relationship between Income Inequality and the Desired Tax Rate
Derivative of Inverse Trig Function Derivative of Inverse Trig Function
From the following function, find the value of a, so that the AROC From the following function, find the value of a, so that the AROC
Prove that each of the following real functions f has a discontinuity. For each function, ... Prove that each of the following real functions f has a discontinuity. For each function, ...
Video: Muscular System Animation

For a complete list of videos, visit our video library