Consider a simple model of a consumer's intertemporal consumption problem. paul lives for two periods, working in the first and retiring in the second. paul earns an income of i in the first period and zero in the second. he must decide how much of his income to consume in the first period and how much to save for consumption in the second period. on any money that paul saves for the second period, paul earns interest at the rate r. so, paul's consumption in period 2 is given by c_2 = (1 + r) (i - c_1) paul's utility function can be written: u (c_1, c_2) = squareroot c_1 + squareroot c_2 (a) if paul has income equal to $100,000 in the first period, and the market interest rate is 10%, how much does paul consume in each period? how much does paul save? (b) if paul must pay income tax at the rate of 25% of income on labor income in the first period, how do your answers change? does the ratio of second period consumption to first period consumption change? why or why not? (c) now assume that paul must pay income tax at the rate of 25% of income on labor income in the first period and also on interest income in the second period. how do your answers to question

Compare the sources of consumer credit 1. consumers use a prearranged loan using special checks 2. consumers use cards with no interest and non -revolving balances 3. consumers pay off debt and credit is automatically renewed 4. consumers take out a loan with a repayment date and have a specific purpose a. travel and entertainment credit b. revolving check credit c. closed-end credit d. revolving credit

On january 1, 2017, sophie's sunlounge owned 4 tanning beds valued at $20,000. during 2017, sophie's bought 3 new beds at a total cost of $14 comma 000, and at the end of the year the market value of all of sophie's beds was $24 comma 000. what was sophie's net investment

Blue computers, a major pc manufacturer in the united states, currently has plants in kentucky and pennsylvania. the kentucky plant has a capacity of 1 million units a year and the pennsylvania plant has a capacity of 1.5 million units a year. the firm divides the united states into five markets: northeast, southeast, midwest, south, and west. each pc sells for $1,000. the firm anticipates a 50 perc~nt growth in demand (in each region) this year (after which demand will stabilize) and wants to build a plant with a capacity of 1.5 million units per year to accommodate the growth. potential sites being considered are in north carolina and california. currently the firm pays federal, state, and local taxes on the income from each plant. federal taxes are 20 percent of income, and all state and local taxes are 7 percent of income in each state. north carolina has offered to reduce taxes for the next 10 years from 7 percent to 2 percent. blue computers would like to take the tax break into consideration when planning its network. consider income over the next 10 years in your analysis. assume that all costs remain unchanged over the 10 years. use a discount factor of 0.1 for your analysis. annual fixed costs, production and shipping costs per unit, and current regional demand (before the 50 percent growth) are shown in table 5-13. (a) if blue computers sets an objective of minimizing total fixed and variable costs, where should they build the new plant? how should the network be structured? (b) if blue computers sets an objective of maximizing after-tax profits, where should they build the new plant? how should the network be structured? variable production and shipping cost ($/unit) annual fixed cost northeast southeast midwest south west (million$) kentucky 185 180 175 175 200 150 pennsylvania 170 190 180 200 220 200 n. carolina 180 180 185 185 215 150 california 220 220 195 195 175 150 demand ('000 units/month) 700 400 400 300 600