# Questions tagged [consumption]

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### Consumption Function Question

I've worked out question 1.1 myself but I'm unsure of how to answer 1.2 and 1.3.
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### I have the following utility function: u(x, y) = −|4 − x| − |4 − y| [closed]

can someone help me to calculate the utility of the following consumption bundles: (4, 4), (4, 5), (5, 4), (4, 3), (3, 4), and α(4, 5) + (1 − α)(3, 4) for α ∈ [0, 1].
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### I have the following utility function: u(c, m) = min{c, m} + c + m [closed]

can someone show me how to illustrate the consumers map of indifference curve? since there are no numbers how will i calculate the MRS (slope) how will i draw the indifference curves?
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### Why do the income and substitution effects cancel for log preferences? Trouble reconciling Slutsky decomposition

I've read (pg 10) in Gourinchas' notes on consumption that the income and substitution effects cancel for log preferences, and I tried to prove this to myself doing the Slutsky decomposition for the ...
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### Why salaries counted under Government expenditure in GDP

In the expenditure approach of GDP calculation, why are government employee's salary counted under Government approach while for private firms, we don't count salaries. I am unable to understand if ...
Say that we are regressing consumption $C_t$ on time $Y_t$. Furthermore, suppose that both series are $I(1)$ and are co-integrated. Given this, we set up the error correction model (ECM) as follows: $... 0answers 97 views ### How to prove that the walrasian demand function$x(p,w)$is continuous in$p$and$w$? If the utility function$u$is continuous and satisfies local nonsatiation, and walrasian demand function$x(p, w)$is a function (i.e. always map to only single values), how to prove that$x(p,w)$is ... 1answer 103 views ### Why does strictly Walrasian demand with quasi-concave utility function mean that the walrasian demand having only one single consumption bundle? In the context of Walrasian demand: Suppose u is continuous, satisfies local nonsatiation, and is strictly quasi-concave, each$w(p, x)$contains a single consumption bundle. The proof I got from a ... 0answers 21 views ### Numerical Solution Using Excel about optimal consumption of households I'm not sure how to solve this problem. I'm given the discount factor, interest rate, probability of high income shock, and various income shock sizes that I need to use to compute optimal consumption.... 1answer 118 views ### Does higher tax on luxury goods does more harm than benefit? I was studying Fiscal policy and I came across measures to reduce income inequality by using fiscal tools. One of the tool mentioned in that was - Higher taxes on luxury goods This makes sense that ... 0answers 19 views ### Relationship b/w consumption & increase in interest rate Please help me clarify this- Case 1 - If interest rates increase then people will save more to reap the benefits and will cut down on their consumption(C) so Consumption will fall. Case 2 - Due to ... 0answers 127 views ### What is the trade-off between? Consumption and Leisure or Income and Leisure? When first presenting the utility function and its arguments, textbooks typically start by stating that utility is a function of consumption and leisure. See for example https://sites.hks.harvard.edu/... 1answer 43 views ### Did real interest rates decrease during the Great Recession Assuming the stock market/housing market crash decreased consumer wealth, decreased business confidence, and decreased expected appreciation rates on houses (thus increasing perceived user cost of ... 0answers 28 views ### Autonomous spending "The term$\left(c_{0}+IQ+G-c_{1}T\right)$is that part of the demand for goods that does not depend on output here ($c_{1}\$ is mpc)." Can someone please explain how will you interpret government ...
The formula for today's consumption is defined as: $$C = Y - T -S^P$$ That being said the consumption of tomorrow is: $$C' = Y' - T' + S^P(1+r)$$ Could anyone possibly explain to me why the ...