n a two-period world, a consumer's utility function is given by u(c1,c2)=ln(c1)+ 6
5
ln(c2) where c1 and c2 are his consumption in the two periods. Denote his income in the two periods by m1 and m2 and the prevailing interest rate by r. (a) Derive the period-1 consumption function c1(r, m1, m2). (b) How much will this individual save in the first period if m1=m2=220 and r=25% ? (c) Suppose the individual has an income of £220 in each period, and that the current prevailing interest rate is 20%. If there is an increase in the prevailing interest rate, we cannot predict how his behaviour will change because we do not know the relative strengths of the income and the substitution effects. True or false? Provide a graphical explanation that supports your claim.
Answers
The statement that "we cannot predict how his behaviour will change" is true.
(a) The consumer's utility function is given by\(u(c1, c2) = ln(c1) + (6/5) ln(c2)\), where c1 and c2 are his consumption in the two periods. Denote his income in the two periods by m1 and m2 and the prevailing interest rate by r.
Let the consumer's lifetime income be \(Y = m1 + (1 + r)m2,\) and let p1 and p2 be the prices of c1 and c2, respectively.
The consumer's budget constraint is given by\(c1 + (1 + r)c2 ≤ Y.\\\)
Solving for c2 gives\(c2 ≤ (Y - c1)/(1 + r)\).
Substituting into the utility function gives\(U(c1) = ln(c1) + (6/5) ln[(Y - c1)/(1 + r)]\).
Differentiating with respect to c1 yields \(dU (c1)/dc1 = 1/c1 - (6/5)[1/(Y - c1) - 1/(1 + r)],\)
which is equal to zero at the point of maximization.
This equation simplifies to (5c1 - Y + c1r)/[5c1(Y - c1)] = 0,
which yields c1 = (5m1 + m2)/(6 + 5r).
Thus, the period-1 consumption function is c1(r, m1, m2) = (5m1 + m2)/(6 + 5r).
(b) If m1 = m2 = 220 and r = 25%, then c1 = (5 × 220 + 220)/(6 + 5 × 0.25) = £92.31.
The individual will therefore save\(£220 - £92.31 = £127.69\) in the first period.
(c) False. If the interest rate rises, the income and substitution effects work in opposite directions to determine how consumption of c1 changes. The substitution effect induces the consumer to consume more c1 now, while the income effect induces the consumer to consume less c1 now. As a result, the change in c1 is ambiguous, as shown in the following graph. As the interest rate rises from r1 to r2, the budget constraint shifts from B1 to B2. If the consumer is initially consuming at A, the substitution effect induces him to consume more c1 and move to C, while the income effect induces him to consume less c1 and move to D. Whether the consumer ends up consuming more or less c1 in the short run thus depends on the relative strengths of the income and substitution effects.
The statement that "we cannot predict how his behaviour will change" is true.
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Related Questions
how to work out opening balance?
Answers
Answer:
...
Explanation:
Answer:
Opening Balance (what you have in bank at the start) plus Total Income (what money comes in) minus Total Expenses (what money goes out) equals Closing Balance (what money you have left). The Opening Balance is the amount of cash at the beginning of the month (1st day of month).
what is your name and why?
Answers
Answer:
my name is sonia and it's my parent's choice,so don't know why
Explanation:
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How do you start an organization?
Answers
For a Profit Organization:
1. Select the best business structure which favors you in taxes and protect. Such as corporation, limited liability company, sole proprietorship, general partnership, limited partnerships or a professional incorporation.
2. Decide the name you want to use to advertise your business.
3. Register company name with the state, county and the federal if applicable.
4. Check licensing requirements with the city county, city, state and federal.
5. Open a bank account
6. Advertising and Marketing
For a Non Profit Organization:
1. There are two types of non profit organizations religious and good cause.
2. It has to be registered wither with the state or county, depending upon the structure and the state you want to incorporate.
3. Apply with the federal to obtain a tax exempt status, so that your donors can claim donations on their tax returns.
4. Open a bank account
5. Delegate duties what you have mentioned in the article you submitted to the Internal Revenue Service.
What is the basic accounting for a non-profit organization?
Answers
The basic accounting for a non-profit organization involves keeping track of its finances, including income, expenses, assets, liabilities, and net worth.
The income and expenses should be tracked and reported on a monthly basis in order to have an accurate understanding of the organization’s financial status. Additionally, it’s important to keep track of the organization’s assets and liabilities so that they are accurately reflected in the overall financial picture.
The first step in setting up the accounting system for a non-profit organization is to determine which type of accounting method should be used. Generally, non-profits will use either the cash or accrual basis. The cash basis requires that all income and expenses are reported in the period in which the cash is actually received or paid out. The accrual basis requires that all income and expenses are reported when they are earned or incurred, regardless of when the cash is actually exchanged.
Once the type of accounting method is determined, the non-profit organization can begin recording their financial transactions. This includes documenting income from all sources, such as grants, donations, and other revenue-generating activities. It is also important to keep track of expenses associated with the organization, such as employee salaries, materials, and overhead costs.
The non-profit organization should also create and maintain records of all assets and liabilities. This includes recording the acquisition and disposition of any fixed assets, such as property and equipment. Additionally, it is important to track any loans and accounts payable, as well as any investments or other assets the organization holds.
Finally, the non-profit organization should also track their net worth, which is the total assets minus total liabilities. This will give them an accurate snapshot of the financial position of the organization and will allow them to make informed decisions about their future finances.
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Business; an organization that uses resources to produce a product is known as a ?
O Private Company
O Shop
O Firm
O Enterprise
Answers
Answer:
Firm
Explanation:
For free ridership to happen, the good or service must be a. rivalrous b. nonexcludable c. a private good or service
Answers
For free ridership to happen, the good or service must be non-excludable. Rivalrous goods or services and private goods do not typically lead to free ridership. So, the correct answer is option b.
Non-excludable goods or services are those which cannot be restricted to only the people who pay for them, allowing individuals to benefit without contributing. This creates an incentive for individuals to become free riders, as they can access the good or service without paying, while others bear the cost. Examples of nonexcludable goods include public parks, street lighting, and national defense.
Rivalrous goods or services on the other hand, are those where one person's consumption reduces the availability for others, making free ridership less likely. Similarly, private goods are those that are both rivalrous and excludable, meaning they can be restricted to those who pay for them and one person's consumption reduces availability for others. These characteristics make free ridership unlikely in the case of private goods or services.
In summary, free ridership occurs when a good or service is non-excludable, allowing individuals to benefit without paying, while others bear the cost. Rivalrous goods or services and private goods do not generally lead to free ridership due to their excludable and limited nature.
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what's the difference between Utility and Marginal Unility?
Answers
Answer:
One is large the other is small
Explanation:
this is for ap-ex learning
_____ is important because it helps you create a plan to complete all tasks.
A. A long-term goal
B. Prioritization
C. A short-term goal
D. An instant goal
Answers
Answer:
B. Prioritization
Explanation:
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Gdp measures total market value of all final goods and services produced in an economy in a ______.
Answers
Gdp measures the total market value of all final goods and services produced in an economy in a given year.
What is GDP?
The foremost common degree of the economy is called net household item (or GDP). GDP measures the whole showcase esteem of all last merchandise and administrations created in an economy in a given year. Merchandise is things that are touchable, such as shoes, staplers, and computers. Administrations are activities, such as haircuts, doctor exams, and car repairs. GDP is implied to capture the whole esteem of all this production.The net household item is the wide quantitative degree of financial action. It is the degree of the showcase esteem of all last merchandise and administrations created in a year interior the boundary of a nation.To know more about GDP visit:
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When should a firm consider expanding from strictly domestic trade to international trade? When should it consider becoming further involved in international trade? What factors might affect the firms desicions in each case?
Answers
Answer: When they begin to get trades beyond how their previous annual turn over and international requests
Explanation:
Many businesses start from homes due to they can't afford to pay or rent a property yet while run their business. Businesses have different methods of operation, while some operate strickly domestically, others might want to either sell domestically too or do same alongside internationally.
A company can begin expanding or considering international trade on it's sales when they begin to receive large recommendation and request internationally.
The factors that might affect most cases always be fear and cost related. Fear of being kicked out of the market by competitors and cost in the sense of competitors beating his prices to give them a challenge.
Any firm should start consider expanding from domestic trade to international trade when its has already saturated the domestic market and needed to expand outside of the country for further growth opportunities.
Normally, a company can begin expanding its scale on international trade when they begin to receive large recommendation and request internationally.
Also, some of the factors that might affect them includes operation cost, trade barrier, competitors etc, in the international market etc
However, a firm should start consider expanding from domestic trade to international trade when its has already saturated the domestic market and needed to expand outside of the country for further growth opportunities.
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Staind, Inc., has 7.5 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 8.75 percent, what is the current bond price?
Answers
Answer:
Explanation:
Assuming the face value of the bond = $1000. Interest = 1000*7.5% = $75
Current Price = Interest * PVAF (10 years, 8.75%) + Maturity Value * PVF (8.75%, 10 Years)
Current Price = $75 * 6.4889 + $1000*0.4322
Current Price = $486.67 + $432.20
Current Price = $918.87
So, the current bond price is $918.87
Active listening is a process of communication in which the listener engages the speaker by repeating or rephrasing the speaker’s words; the listener may also mirror body language or _____.
apathetic behavior
tone of voice
nervous tics
hand gestures
Answers
Answer: tone of voice
Explanation:
Active listening refers to a process of communication whereby the speaker is engaged by the listener who repeats the words or statements heard.
Active listening involves the individual listening with all his or her senses and giving the speaker all the attention needed.
In active listening, the listener can mirror the body language or the tone of voice of the speaker. Active listening can be either acquired or developed through constant practice.
Which of the following is true of channel members in a distribution channel?a. They act independently of each other.b. Their competence and cooperation don't affect the company's image or profits.c. All of these are true of channel members. d. They are not accountable to other channel members. e. They play specialized roles in the channel.
Answers
They play specialized roles in the channel is true of channel members in a distribution channel. Thus, option (e) is correct.
The skill and collaboration of channel members, who perform specialized roles in the distribution channel, can have a big impact on the company's reputation and financial success.
No matter whether the parties are thousands of miles apart or in the same town, the main goal of any channel of distribution is to close the gap between the manufacturer and the consumer of a product.
As a result, the significance of the true of channel members in a distribution channel are the aforementioned. Therefore, option (e) is correct.
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The true statement about channel members in a distribution channel is that they play specialized roles in the channel.
In a distribution channel, channel members refer to the intermediaries or entities involved in the movement of products or services from the manufacturer to the end consumer. These channel members can include wholesalers, retailers, distributors, and agents.
Contrary to option a, channel members do not act independently of each other. They work together and collaborate to ensure the smooth flow of products or services within the distribution channel. Their competence and cooperation are crucial as they directly impact the company's image and profits. If one channel member fails to perform their role effectively, it can disrupt the entire distribution process and negatively affect the company's reputation and financial performance.
Option b is also incorrect. The competence and cooperation of channel members significantly affect the company's image and profits. If channel members are not competent or fail to cooperate, it can lead to delays, errors, and customer dissatisfaction, ultimately impacting the company's success.
Option c is incorrect as well. Not all statements are true of channel members. The correct statement is that channel members play specialized roles in the distribution channel. Each channel member has specific responsibilities and functions within the distribution process, contributing to the overall efficiency and effectiveness of the channel.
Option d is incorrect. Channel members are accountable to each other and their performance is interdependent. They rely on each other to fulfill their respective roles and responsibilities in the distribution channel.
Therefore, the correct answer is option e. Channel members play specialized roles in the distribution channel.
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Pharmacy technicians work in pharmacies that can be found where? Check all of the boxes that apply.
hospitals
drug stores
medical clinics
schools
manufacturing labs
Answers
Answer:
could be 3 of those answer choices
-hospitals
-drug stores
medical clinics
Explanation:
Answer:
1 2 3
Explanation:
With the help of online research, write a short report on “glocalization.”
Answers
The phenomena of Glocalization, which is best described as Thinking Globally, Acting Locally, is created when the two terms of globalisation and localization are combined.
To put it more properly, we may say that although if a single brand is produced, sold, and distributed globally, it is nevertheless personalised and customised to suit the tastes and preferences of customers in the many global marketplaces.
It is carried out since each region of the world has its own unique culture, linguistic preferences, demands, and desires.
By adjusting their offerings and products to meet the needs of that specific market, businesses may effectively position and place their items, resulting in high revenues and devoted customers.
The following are all global brands, although they cater to the demands of their customers in various parts of the world while selling items.
Chips by Lays (They sell different flavours in different parts of the world, according to the taste preference and eating habits of that country).
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Give two examples of products sold in perfectly competitive markets and two examples of products sold in monopolistically competitive markets.
Answers
Apples and oranges are perfectly competitive products, while Ralph Lauren cologne and Maybelline cosmetics are monopolistically competitive products.
Perfectly Competitive Markets and Monopolistically Competitive MarketsA perfectly competitive can be described as a market in which there are many buyers and sellers, no transaction costs, no barriers to entry and leave, homogeneous products, no market control by a single firm, and perfect information about the price of a good.
Two examples of products sold in perfectly competitive markets are Apples and oranges.
A monopolistically competitive market is one in which several producers compete against one another, yet sell items that differ from one another and are thus not perfect substitutes.
Two examples of products sold in monopolistically competitive markets are Ralph Lauren cologne and Maybelline cosmetics.
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A computer game that can be purchased online and played right away has good _____utility.
A. Form
B. Information
C. Value
D. Time
Answers
An mnc's long-term financing decisions are satisfied in the ________ market and the ________.
Answers
An MNC's long-term financing decisions are satisfied in the capital market and the international market.
The capital market refers to the market where long-term securities like stocks and bonds are bought and sold. MNCs can raise funds by issuing these securities to investors in the capital market.
The international market, on the other hand, refers to the global market where MNCs can access capital from foreign investors or borrow funds in foreign currencies. This allows MNCs to diversify their sources of financing and tap into a larger pool of potential investors. Overall, the capital market and international market play crucial roles in meeting an MNC's long-term financing needs.
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Why would you use a chart AND data in Excel?
O colorful
graphically represents the data
easier to compile data
visually clearer
to analyze individual values
Answers
Answer:
a b d
Explanation:
:)
There are many reasons for which we can use Chart and Data in excel and some of them are that it:
Graphically Represents the data
Visually Clearer
To analyze individual values
What is Excel?Excel is a Spreadsheet used to perform calculations and to record the numerical data and also perform functions on that data like Addition, Subtraction, Multiply, Average etc.
How can we represent data graphically on Excel?In Excel there are various modes or designs in which one can represent data. For example, we can add charts like 2D clustered chart or 3d chart, pie charts. We can also insert tables with unlimited rows and columns.
Also we can add images which can more clearly represent the data.
Hence Excel is a most efficient way to compute data and also to Represent that data effectively.
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publicity that is made available to the mass media is an example of ________.
Answers
In a common size income statement, the 100% figure is.
Answers
What best describes the main purpose of a budget
Answers
Explanation:
A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home. Overall, a budget puts a person on stronger financial footing for both the day-to-day and the long term.
Which of the following is a benefit of tracking the demographic information of a customer?
A. To target new customers who are similar to current customers
B. To send coupons to current customers
C. To make sure customer orders ready
D. To track if a customer is going to a competitor
Answers
Answer:
It is numder a
Explanation:
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Cain Company reports net cash provided by operating activities of $35,000. It also reports the following information under “Adjustments to reconcile net income to net cash provided by operating activities” on its statement of cash flows (using the indirect method).
Answers
It can be seen from the solutions given that Cain's net income is $24,000.
Here is the solution:Net income = Net cash provided by operating activities - Adjustments
= $35,000 - $6,000 - $10,000 + $4,000 + $7,000 + $4,000
= $24,000
Therefore, Cain's net income is $24,000.
Here is a breakdown of the adjustments:
To determine cash flow from operations, it is necessary to include the gain on equipment sales in the net income as it is a non-cash entry.
A rise in accounts receivable implies that customers are prolonging payment of their invoices, resulting in decreased cash flow from the company's activities.
The depreciation expense is classified as a non-cash expense, hence it must be included in the calculation of cash from operations by adding it back to the net income.
A decrease in inventory indicates that the company is experiencing faster turnover of its inventory, leading to increased cash flow generated by its operations.
A rise in prepaid expenses denotes that the company is channeling more funds towards prepaid expenditures like insurance and rent, implying a reduced cash inflow from its operational activities.
A decline in the amount of wages that the company owes indicates that it is not promptly compensating its workforce. Consequently, this implies that the company's operational cash flow is reduced.
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What is FDIC compliance?
Answers
FDIC is an agency that keeps a check on the financial institutions of the country in order to ensure the safety and security of the consumers. It ensures the fair exchange of finances.
FDIC stands for Federal Deposit Insurance Corporation. It is an independent agency. The FDIC compliance includes the basic rules and etiquettes for the transactions and responsibilities of the authorities.
Finances are the money spent by a person, business, company, or any organization in order to pay for something. Finance is simply the give and take process that includes money. However the term also includes the proper planning and measures of how the money could be spent efficiently.
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According to economists,
almost everything we do
has costs and benefits.
Identify the costs and
benefits of each of the
following: getting a dental
checkup and getting an
extra hour of sleep.
Answers
A cost means the amount of money or resources expended on something while a benefit means the thing that we gain from an actitivy.
What is C & B of getting a dental checkup?The benefits of going to the dentists is to get your teeth cleaned but the cost is paying for the dentist and maybe going for another checkup.
What is C & B of getting an extra hour of sleep?The benefits of getting an extra hour of sleep is that you will be more alert in the morning but the cost is you get less time to do things.
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FILL THE BLANK. "Different cultures have different preferences for how to train
employees. Based on Hofstede’s cultural dimensions, a culture with
high _______ is likely to expect formal
instructional environments a"
Answers
"Different cultures have different preferences for how to train employees. Based on Hofstede’s cultural dimensions, a culture with high Power Distance is likely to expect formal instructional environments."
Power Distance is a cultural dimension that measures the degree of acceptance and expectation of hierarchical authority within a society. In cultures with high Power Distance, there is a significant power gap between individuals, and authority figures are highly respected. Therefore, such cultures tend to value formal instructional environments where clear hierarchies and structured training methods are emphasized to maintain the power dynamics and ensure compliance with authority.
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Suppoe Cuba’ government collape and the nation embark on a path of economic tranition. How might Cuba’ experience differ from that of Ruia or China?
Answers
The Cuba experience differ from that of Ruia or China is Due to its geographical location and other constraints, it will be difficult for Cuba to enact reforms.
Russia took advantage of its technological advantage and energy-related natural resources to emerge from a financial crisis that even forced her to default. On the other hand, China has a large population of unskilled laborers, but China kept its wages low and attracted manufacturing firms. Cuba is a relatively small country, and the US imposed a trade embargo on it after the communist revolution, which was only recently lifted. It was practically impossible to thrive without doing business with the US because it is the largest emitter in the world and has influence in that region.
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retail specialties just announced that its chief operating officer is retiring at the end of this month. this announcement will cause the firm's stock price to: group of answer choices increase. remain constant. either increase, decrease, or remain constant. either increase or remain constant.
Answers
Retail Specialties has announced that its chief operating officer will retire at the end of this month. The announcement could cause the company's stock price to rise, fall or remain constant.
How do you calculate your company's price?Company valuation by stock price: If a company's shares are already publicly traded, the easiest way to calculate market value is to multiply the number of shares outstanding by the current price at which the shares are sold on the relevant stock exchange.
What is a company's share price?The term stock price refers to the current price at which a stock is traded on the market. All publicly traded companies receive a price when they issue shares. This is a value attribution that ideally reflects the company's values.
Why is a company's stock price important?A company's stock price reflects investors' perception of its ability to generate profits and grow in the future. If shareholders are happy and the company is performing well, as reflected in the stock price, management is more likely to retain jobs and receive raises.
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The ________ of a firm is the amount of time required for a company to convert cash invested in its operations to cash received as a result of its operations.
Answers
The cash conversion cycle of a firm is the amount of time required for a company to convert cash invested in its operations to cash as a result of its operations.
The period (expressed in days) it takes for a business to convert its investments in inventory and other resources into cash flows from sales is known as the cash conversion cycle (CCC). The Cash Conversion Cycle, also known as the Net Operating Cycle or just the Cash Cycle, aims to quantify the length of time that each net input dollar spends in the production and sales cycle before it is turned into received cash.
This metric accounts for the amount of time required by the business to sell its inventory, the length of time needed to collect receivables, and the amount of time required to pay its debts.
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