Suppose a consumer's utility function is U(F0, F1) = F00.5F10.5, where F0 represents food consumed this year and F1 represents food consumed next year. For that utility function, the marginal utility of food consumed this year is 0.5 × (F1/F0)0.5 and the marginal utility of food consumed next year is 0.5 × (F0/F1)0.5. Suppose the consumer earns $100 this year and nothing in the next, food costs $1 per unit in both years, and the interest rate is 10%. How much does she spend this year, and how much does she save?
A. She spends $45 this year and saves $55.
B. She spends $50 this year and saves $50.
C. She spends $55 this year and saves $45.
D. She spends $95 this year and saves $5.
B. She spends $50 this year and saves $50.
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When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the
A) output effect. B) substitution effect. C) income effect. D) price effect.
The share of ________ goods in employment is ________ across the country. The share of ________ goods in employment is ________ across the country
A) nontraded; uniform; traded; variable B) traded; uniform; nontraded; variable C) durable; uniform; nondurable; variable D) nondurable; uniform; durable; variable E) nontraded; variable; traded; uniform
Suppose both goods L and M have a price of $6 . To maximize your utility from spending a given amount of income on the two goods you should: a. consume more each as long as they provide more than 6 units of marginal utility each
b. consume them so that consumption of each good provides the same total utility. c. consume them so that consumption of the last unit each good provides the same marginal utility. d. all of the above.
If income were equally distributed, a nation's Lorenz curve would be identical to the _______________.
Fill in the blank(s) with the appropriate word(s).