Chapter 6: Problem 16
Why does a change in income cause a parallel shift in the budget constraint?
Chapter 6: Problem 16
Why does a change in income cause a parallel shift in the budget constraint?
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Get started for freeWhat assumptions does the model of intertemporal choice make that are not likely true in the real world and would make the model harder to use in practice?
What is the rule relating the ratio of marginal utility to prices of two goods at the optimal choice? Explain why, if this rule does not hold, the choice cannot be utility-maximizing.
According to the model of intertemporal choice, what are the major factors which determine how much saving an individual will do? What factors might a behavioral economist use to explain savings decisions?
In the labor-leisure choice model, what is the price of leisure?
As a general rule, is it safe to assume that a lower interest rate will encourage significantly lower financial savings for all individuals? Explain.
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