Question: Suppose you are given y > 0,3/2 = 0, a = 0,r> 0. What would happen to the opportunity set if i) the first
Suppose you are given y > 0,3/2 = 0, a = 0,r> 0. What would happen to the opportunity set if i) the first period endowment y, increases or ii) the market interest rate (r) decreases? You should answer this question by drawing a figure (you can use pen and paper). Be sure to define the intercepts and slope of the opportunity set in each case. Please also answer this question in general terms.
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In general terms the opportunity set in a twoperiod consumption model represents the combinations of ... View full answer
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