Explain what decisions and calculations a very foresighted consumer must make to determine her consumption decisions in any period
What will be an ideal response?
An individual would have to calculate her financial wealth, housing wealth, and human wealth. Of course, this implies that the individual would have to form expectations of future interest rates, income, and taxes for the remainder of her working life. Once done, the individual would then calculate the amount of consumption per year she preferred given this total wealth. If in the current period, current disposable income is less than this level of C, she would borrow the difference.
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Assume the following. In location A yearly temperatures range from -30°F to 100°F and in location B yearly temperatures range from 55°F to 75°F. In both locations the average yearly temperature equals 65°F. We can conclude that
A) temperature in location A has a higher variance. B) temperature in location B has a higher standard deviation. C) temperature in location A has a lower standard deviation. D) temperatures in both locations have the same standard deviation but different variances.
A graph that shows the maximum combinations of two goods which a consumer can purchase with a given money income is:
A. The production possibilities curve B. An indifference curve C. A demand curve D. A budget line