A Giffen good is a good whose demand increases when its price increases (at some price) While it is clearly impossible for this to happen at all prices, it is theoretically possible if the good is suf- ficiently inferior. (Potatoes in the midst of the Irish potato famine is the most oft-cited example, but even this is debated.) (a) Illustrate diagrammatically a Giffen good, showing how the income effect dominates the substitution effect. Consider now Sheila who consumes leisure (h) and a consumption good (c), maximizing U(c, h) subject to the budget constraint c=w(T-h)+1, where T is the total time Sheila has available to either work or enjoy leisure (and I have normal- ized the price of consumption to 1).
(b) Observe that the budget constraint can be written as C+ wh=wT+1. Illustrate graphically the impace on the buget constraint of an increase in the price of leisure
(c) Under what conditions will leisure be a Giffen good (i. e., an increase in its price w leads to increase in in the consumption of leisure h)? For this part, it is enough to argue using diagrams.
(d) Suppose Sheila's utility function is Cobb Douglas, Utc, h]= ch. What Sheila's utility maximizing choice of leisure? Is it ever increasing in w?

Abigail spent $100 on a new edition of the personal finance textbook rather than $75 for a used copy. the additional cost for the new copy is called the

The following balance sheet for the los gatos corporation was prepared by a recently hired accountant. in reviewing the statement you notice several errors. los gatos corporation balance sheet at december 31, 2018 assets cash $ 44,000 accounts receivable 86,000 inventories 57,000 machinery (net) 122,000 franchise (net) 32,000 total assets $ 341,000 liabilities and shareholders' equity accounts payable $ 54,000 allowance for uncollectible accounts 7,000 note payable 59,000 bonds payable 112,000 shareholders' equity 109,000 total liabilities and shareholders' equity $ 341,000 additional information: cash includes a $22,000 restricted amount to be used for repayment of the bonds payable in 2022. the cost of the machinery is $194,000. accounts receivable includes a $22,000 note receivable from a customer due in 2021. the note payable includes accrued interest of $7,000. principal and interest are both due on february 1, 2019. the company began operations in 2013. income less dividends since inception of the company totals $37,000. 52,000 shares of no par common stock were issued in 2013. 200,000 shares are authorized. required: prepare a corrected, classified balance sheet. (amounts to be deducted should be indicated by a minus sign.)

The former chairman of the federal reserve, alan greenspan, used the term "irrational exuberance" in 1996 to describe the high levels of optimism among stock market investors at the time. stock market indexes such as the s& p composite price index were at an all-time high. some commentators believed that the fed should intervene to slow the expansion of the economy. why would central banks want to clamp down when the economy is growing? a. to block the formation of unsustainable speculative asset bubbles. b. to curtail excessive profits in the banking system. c. to prevent inflationary forces from gathering momentum. d. all of the above. e. a and c only.