Apply the The Ricardian model of international trade to the following questionsSuppose that the investor (whose name is Avril) is risk loving withb = and5utility-of-money function v (c) = c². Let p = 2, t = 3,8 = 1, re= ₁13(a) What is Avrilís contingent consumption if x = 0?(b) What is Avrilís contingent consumption if x = 10? (Express theconsumption level in each state as a fraction, not a decimal.)(c) Draw Avriliş budget constraint in a CC diagram. Be sure to ex-plain how you constructedyour Ögure.(d) Show that Avril has the same expected utility at x = 10 and x = 0. Add an indifferencecurve to your diagram to illustratethis fact.|(e) Using your diagram, explain why Avril will choose x = 0 if the5tax rate increases above t = and will choose x = 10 if itand w = 10.decreases below t =513

The Ricardian model states that countries will specialize in producing and exporting goods in which…

Apply the The Ricardian model of international trade to the following questions Suppose that the investor (whose name is Avril) is risk loving with utility-of-money function v (c) = c². Let p = 2, t =,= 1, t= 3 rb = and w = 10. 13 (a) What is Avrilís contingent consumption if x = 0? (b) What is Avrilís contingent consumption if x = 10? (Express the consumption level in each state as a fraction, not a decimal.) (c) Draw Avrilís budget constraint in a CC diagram. Be sure to ex-plain how you constructed your Ögure. (d) Show that Avril has the same expected utility at x = 10 and x = 0. Add an indifference curve to your diagram to illustrate this fact. | (e) Using your diagram, explain why Avril will choose x = 0 if the 5 tax rate increases above t = and will choose x = 10 if it 13 5 13 decreases below t =

Apply the The Ricardian model of international trade to the following questions Suppose that the investor (whose name is Avril) is risk loving with utility-of-money function v (c) = c². Let p = 2, t =,= 1, t= 3 rb = and w = 10. 13 (a) What is Avrilís contingent consumption if x = 0? (b) What is Avrilís contingent consumption if x = 10? (Express the consumption level in each state as a fraction, not a decimal.) (c) Draw Avrilís budget constraint in a CC diagram. Be sure to ex-plain how you constructed your Ögure. (d) Show that Avril has the same expected utility at x = 10 and x = 0. Add an indifference curve to your diagram to illustrate this fact. | (e) Using your diagram, explain why Avril will choose x = 0 if the 5 tax rate increases above t = and will choose x = 10 if it 13 5 13 decreases below t =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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