Question 1

If Peregrine in Problem 1 consumes (1, 500, 1, 080) and earns (1, 000, 1, 680) and if the interest rate is 20%, the present value of his endowment is

Accepted Answer

A)  $2,680. 
B)  $5,280. 
C)  $2,400. 
D)  $2,580. 
E)  $6,280. 
A)  $2,680. 
B)  $5,280. 
C)  $2,400. 
D)  $2,580. 
E)  $6,280.

Question 2

Patience has a utility function U(c1, c2)   , where c1 is her consumption in period 1 and c2 is her consumption in period 2. Her income in period 1 is 3 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2?

Accepted Answer

A)  0.75 
B)  0.13 
C)  0.25 
D)  0 
E)  0.38 
A)  0.75 
B)  0.13 
C)  0.25 
D)  0 
E)  0.38

Question 3

Patience has a utility function U(c1, c2)   , where c1 is her consumption in period 1 and c2 is her consumption in period 2. Her income in period 1 is 2 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2?

Accepted Answer

A)  0 
B)  0.08 
C)  0.30 
D)  0.15 
E)  0.23 
A)  0 
B)  0.08 
C)  0.30 
D)  0.15 
E)  0.23

Question 4

If Peregrine in Problem 1 consumes (1, 400, 1, 210) and earns (900, 1, 760) and if the interest rate is 10%, the present value of his endowment is

Accepted Answer

A)  $2,660. 
B)  $2,500. 
C)  $2,610. 
D)  $5,250. 
E)  $6,150. 
A)  $2,660. 
B)  $2,500. 
C)  $2,610. 
D)  $5,250. 
E)  $6,150.

Question 5

In the village in Problem 10, if the harvest this year is 6,000 bushels of grain and the harvest next year will be 900 bushels and if rats eat 10% of any grain that is stored for a year, how many bushels of grain could the villagers consume next year if they consume 1,000 bushels of grain this year?

Accepted Answer

A)  6,900 
B)  5,400 
C)  8,100 
D)  4,500 
E)  1,000 
A)  6,900 
B)  5,400 
C)  8,100 
D)  4,500 
E)  1,000

Question 6

Suppose that Molly from Problem 2 had an income of $200 in period 1 and an income of $460 in period 2. Suppose that her utility function were ca1c1-a2, where a = 0.40 and the interest rate were 15%. If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would

Accepted Answer

A)  increase by $80. 
B)  increase by $40. 
C)  double. 
D)  stay constant. 
E)  increase by $200. 
A)  increase by $80. 
B)  increase by $40. 
C)  double. 
D)  stay constant. 
E)  increase by $200.

Question 7

Mr. O. B. Kandle, of Problem 8, has a utility function c1c2, where c1 is his consumption in period 1 and c2 is his consumption in period 2. He has no income in period 2. If he had an income of $70,000 in period 1 and the interest rate increased from 10 to 16%,

Accepted Answer

A)  his savings would increase by 6% and his consumption in period 2 would also increase. 
B)  his consumption in both periods would decrease. 
C)  his savings would not change but his consumption in period 2 would increase by 2,100. 
D)  his consumption in both periods would increase. 
E)  his consumption in period 1 would decrease by 16% and his consumption in period 2 would also decrease. 
A)  his savings would increase by 6% and his consumption in period 2 would also increase. 
B)  his consumption in both periods would decrease. 
C)  his savings would not change but his consumption in period 2 would increase by 2,100. 
D)  his consumption in both periods would increase. 
E)  his consumption in period 1 would decrease by 16% and his consumption in period 2 would also decrease.

Question 8

Mr. O. B. Kandle, of Problem 8, has a utility function c1c2, where c1 is his consumption in period 1 and c2 is his consumption in period 2. He has no income in period 2. If he had an income of $40,000 in period 1 and the interest rate increased from 10 to 19%,

Accepted Answer

A)  his savings would not change but his consumption in period 2 would increase by 1,800. 
B)  his savings would increase by 9% and his consumption in period 2 would also increase. 
C)  his consumption in both periods would decrease. 
D)  his consumption in both periods would increase. 
E)  his consumption in period 1 would decrease by 19% and his consumption in period 2 would also decrease. 
A)  his savings would not change but his consumption in period 2 would increase by 1,800. 
B)  his savings would increase by 9% and his consumption in period 2 would also increase. 
C)  his consumption in both periods would decrease. 
D)  his consumption in both periods would increase. 
E)  his consumption in period 1 would decrease by 19% and his consumption in period 2 would also decrease.

Question 9

In the village in Problem 10, if the harvest this year is 4,000 bushels of grain and the harvest next year will be 1,200 bushels and if rats eat 50% of any grain that is stored for a year, how many bushels of grain could the villagers consume next year if they consume 1,000 bushels of grain this year?

Accepted Answer

A)  4,050 
B)  5,200 
C)  2,700 
D)  1,500 
E)  1,300 
A)  4,050 
B)  5,200 
C)  2,700 
D)  1,500 
E)  1,300

Question 10

Suppose that Molly from Problem 2 had an income of $400 in period 1 and an income of $690 in period 2. Suppose that her utility function were ca1c1-a2, where a = 0.80 and the interest rate were 15%. If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would

Accepted Answer

A)  stay constant. 
B)  increase by $320. 
C)  increase by $160. 
D)  double. 
E)  increase by $400. 
A)  stay constant. 
B)  increase by $320. 
C)  increase by $160. 
D)  double. 
E)  increase by $400.

Exam 9: A: Intertemporal Choice

If Peregrine in Problem 1 consumes (1, 500, 1, 080) and earns (1, 000, 1, 680) and if the interest rate is 20%, the present value of his endowment is

Patience has a utility function U(c1, c2) , where c1 is her consumption in period 1 and c2 is her consumption in period 2. Her income in period 1 is 3 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2?

Patience has a utility function U(c1, c2) , where c1 is her consumption in period 1 and c2 is her consumption in period 2. Her income in period 1 is 2 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2?

If Peregrine in Problem 1 consumes (1, 400, 1, 210) and earns (900, 1, 760) and if the interest rate is 10%, the present value of his endowment is

Mr. O. B. Kandle, of Problem 8, has a utility function c1c2, where c1 is his consumption in period 1 and c2 is his consumption in period 2. He has no income in period 2. If he had an income of $70,000 in period 1 and the interest rate increased from 10 to 16%,

Mr. O. B. Kandle, of Problem 8, has a utility function c1c2, where c1 is his consumption in period 1 and c2 is his consumption in period 2. He has no income in period 2. If he had an income of $40,000 in period 1 and the interest rate increased from 10 to 19%,

Budget Constraint

A: Budget Constraint

Preferences

A: Preferences

Utility

A: Utility

Choice

A: Choice

Demand

A: Demand

Revealed Preference

A: Revealed Preference

Slutsky Equation

A: Slutsky Equation

Buying and Selling

A: Buying and Selling

Intertemporal Choice

Asset Markets

A: Asset Markets

Uncertainty

A: Uncertainty

Risky Assets

A: Risky Assets

Consumers Surplus

A: Consumers Surplus

Market Demand

A: Market Demand

Equilibrium

A: Equilibrium

Auctions

A: Auctions

Technology

A: Technology

Profit Maximization

A: Profit Maximization

Cost Minimization

A: Cost Minimization

Cost Curves

A: Cost Curves

Firm Supply

A: Firm Supply

Industry Supply

A: Industry Supply

Monopoly

A: Monopoly

Monopoly Behavior

A: Monopoly Behavior

Factor Markets

A: Factor Markets

Oligopoly

A: Oligopoly

Game Theory

A: Game Theory

Game Applications

A: Game Applications

Behavioral Economics

Exchange

A: Exchange

Production

A: Production

Welfare

A: Welfare

Externalities

A: Externalities

Information Technology

A: Information Technology

Public Goods

A: Public Goods

Asymmetric Information

A: Asymmetric Information

Filters

Patience has a utility function U(c₁, c₂) , where c₁ is her consumption in period 1 and c₂ is her consumption in period 2. Her income in period 1 is 3 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2?

Patience has a utility function U(c₁, c₂) , where c₁ is her consumption in period 1 and c₂ is her consumption in period 2. Her income in period 1 is 2 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2?

Mr. O. B. Kandle, of Problem 8, has a utility function c₁c₂, where c₁ is his consumption in period 1 and c₂ is his consumption in period 2. He has no income in period 2. If he had an income of $70,000 in period 1 and the interest rate increased from 10 to 16%,

Mr. O. B. Kandle, of Problem 8, has a utility function c₁c₂, where c₁ is his consumption in period 1 and c₂ is his consumption in period 2. He has no income in period 2. If he had an income of $40,000 in period 1 and the interest rate increased from 10 to 19%,