Consider two individuals A and B, both of whom have preferences defined over two goods x and y: U(x, y) = -1/2(1-x)^2 - 1/2 (1-y)^2

Assume that Px = Py = 1.

a. Suppose that individual A has an income of $2 and individual B has an income of $0.50. Set up and solve both (UMP]s. What is each individual's optimal consumption bundle?
b. Compare the marginal utilities of each good between individuals A and B at the optimal bundle. Is either individual satiated? What implications does this have for their marginal utilities of income? Explain.

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Witch is an example of a non durable good?

Lucy is catering an important luncheon and wants to make sure her bisque has the perfect consistency. for her bisque to turn out right, it should have the consistency of a. cold heavy cream. b. warm milk. c. foie gras. d. thick oatmeal.