Business, 30.07.2021 01:00 veronica25681

A Giffen good is a good whose demand increases when its price increases (at some price) While it is clearly impossible for this to happen at all prices, it is theoretically possible if the good is suf- ficiently inferior. (Potatoes in the midst of the Irish potato famine is the most oft-cited example, but even this is debated.) (a) Illustrate diagrammatically a Giffen good, showing how the income effect dominates the substitution effect. Consider now Sheila who consumes leisure (h) and a consumption good (c), maximizing U(c, h) subject to the budget constraint c=w(T-h)+1, where T is the total time Sheila has available to either work or enjoy leisure (and I have normal- ized the price of consumption to 1).
(b) Observe that the budget constraint can be written as C+ wh=wT+1. Illustrate graphically the impace on the buget constraint of an increase in the price of leisure
(c) Under what conditions will leisure be a Giffen good (i. e., an increase in its price w leads to increase in in the consumption of leisure h)? For this part, it is enough to argue using diagrams.
(d) Suppose Sheila's utility function is Cobb Douglas, Utc, h]= ch. What Sheila's utility maximizing choice of leisure? Is it ever increasing in w?

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 21:00

On june 1 of the current year, chad wilson established a business to manage rental property. he completed the following transactions during june: opened a business bank account with a deposit of $28,000 from personal funds. purchased office supplies on account, $2,690. received cash from fees earned for managing rental property, $7,390. paid rent on office and equipment for the month, $3,310. paid creditors on account, $1,230. billed customers for fees earned for managing rental property, $6,130. paid automobile expenses (including rental charges) for the month, $740, and miscellaneous expenses, $370. paid office salaries, $2,330. determined that the cost of supplies on hand was $1,590; therefore, the cost of supplies used was $1,100. withdrew cash for personal use, $2,210. required: 1. indicate the effect of each transaction and the balances after each transaction: for those boxes in which no entry is required, leave the box blank. for those boxes in which you must enter subtractive or negative numbers use a minus sign. (example: -300) answer

Answers: 1

Answer

Business, 22.06.2019 05:40

Grant, inc., acquired 30% of south co.’s voting stock for $200,000 on january 2, year 1, and did not elect the fair value option. the price equaled the carrying amount and the fair value of the interest purchased in south’s net assets. grant’s 30% interest in south gave grant the ability to exercise significant influence over south’s operating and financial policies. during year 1, south earned $80,000 and paid dividends of $50,000. south reported earnings of $100,000 for the 6 months ended june 30, year 2, and $200,000 for the year ended december 31, year 2. on july 1, year 2, grant sold half of its stock in south for $150,000 cash. south paid dividends of $60,000 on october 1, year 2. before income taxes, what amount should grant include in its year 1 income statement as a result of the investment?

Answers: 1

Answer

Business, 22.06.2019 06:20

At a small store, a customer enters the front door on average every 8 minutes. a prior study indicated that the time between customers entering the front door during weekdays follows an exponential distribution. what is the probability that the time between customers entering the store on a weekday will be less than or equal to 7? select one: a. 62 b. 43 c. 1/8 d. 7/8 e. 58

Answers: 1

Answer

Business, 22.06.2019 14:30

United continental holdings, inc., (ual), operates passenger service throughout the world. the following data (in millions) were adapted from a recent financial statement of united. sales (revenue) $38,901 average property, plant, and equipment 17,219 average intangible assets 8,883 1. compute the asset turnover. round your answer to two decimal places.

Answers: 2

Answer

You know the right answer?

A Giffen good is a good whose demand increases when its price increases (at some price) While it is...

Questions