Asked by Sally Suzie on Jul 03, 2024
Verified
Refer to Figure 21-19. If Hannah chose to spend $30,000 on consumption when young, then how much could she spend on consumption when old?
Indifference Curves
Graphical representations of different combinations of two goods between which a consumer is indifferent, showing preferences regarding consumption.
Consumption When Old
Consumption when old refers to the spending habits of individuals during retirement or later stages of life, often planned through savings and pension.
Retirement
The phase of life where an individual stops full-time work, often accompanied by receiving a pension or retirement benefits.
- Deduce the optimal assortment of goods for consumption, considering a consumer's available funds and the price points of items.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
The interest rate is
50,000÷40,000−1=0.2550,000 \div 40,000 - 1 = 0.2550,000÷40,000−1=0.25 or 25 percent. If she spent $30,000 when young, then she would save $10,000 and have
$10,000×1.25=$12,500\$ 10,000 \times 1.25 = \$ 12,500$10,000×1.25=$12,500 to spend when old.
50,000÷40,000−1=0.2550,000 \div 40,000 - 1 = 0.2550,000÷40,000−1=0.25 or 25 percent. If she spent $30,000 when young, then she would save $10,000 and have
$10,000×1.25=$12,500\$ 10,000 \times 1.25 = \$ 12,500$10,000×1.25=$12,500 to spend when old.
Learning Objectives
- Deduce the optimal assortment of goods for consumption, considering a consumer's available funds and the price points of items.