*ONLY NEED QUESTION #3* 3. Another issue facing millennials is the growing incom
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*ONLY NEED QUESTION #3*
3. Another issue facing millennials is the growing income and wealth inequality. We will use our model to understand the implications of this issue. A. Begin from the baseline preferences of question 1. Xavier has an endowment of 1100 pounds in each period (Ei-E2-1100). Yuri has an endowment of only 900 pounds in each period E-E-900). Note that the total amounts have not changed (1100+ 900 1000 1000- 2000). Determine the equilibrium interest rate. B. Repeat the analysis assuming Xavier has an endowment of 1200 pounds in each period (E1-E2-1200). Yuri has an endowment of only 800 pounds in each period (Ei-E2-800). Determine the equilibrium interest rate. C. Explain how and why the interest rate changes as Yuri (millennials) becomes relatively poorer and the wealth distribution becomes more unequal.Explanation / Answer
Marginal analysis involves a cost-versus-benefits comparison of various business activities. In marginal analysis, the cost of an activity is measured against incremental changes in volume to determine how the overall change in cost will affect the bottom line of a business. Marginal analysis can show the cost of additional production by a business all the way up to the break-even point. This is generally the maximum cost that a business can sustain without losing money.
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