« previous next »

Author Question: Jose gets utility from the goods he consumes and also the income he earns. His utility function is ... (Read 87 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?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

Did you know?

It is believed that the Incas used anesthesia. Evidence supports the theory that shamans chewed cocoa leaves and drilled holes into the heads of patients (letting evil spirits escape), spitting into the wounds they made. The mixture of cocaine, saliva, and resin numbed the site enough to allow hours of drilling.

Did you know?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

Did you know?

A headache when you wake up in the morning is indicative of sinusitis. Other symptoms of sinusitis can include fever, weakness, tiredness, a cough that may be more severe at night, and a runny nose or nasal congestion.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Proteomes and their relationship to cell structure, function, and organization. Proteomes and their relationship to cell structure, function, and organization.
Sociologists use income, education, and occupational prestige to measure social class. For most ... Sociologists use income, education, and occupational prestige to measure social class. For most ...
As China has embraced its version of capitalism, wealth has grown, as has consumption. Luxury goods ... As China has embraced its version of capitalism, wealth has grown, as has consumption. Luxury goods ...
The function of the intrafusal motor neurons. The function of the intrafusal motor neurons.
How to find an angle in radians degrees for any given reciprocal trigonometric function How to find an angle in radians degrees for any given reciprocal trigonometric function
Oxygen affinity of hemoglobin as a function of pH Oxygen affinity of hemoglobin as a function of pH
Video: Hydrogen bonds - role in the body

For a complete list of videos, visit our video library