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Intermediate Microeconomics

Robert W. Clower, Philip E. Graves, Robert L. Sexton

Chapter 21

Asset Management and Intertemporal Choice - all with Video Answers

Educators

Chapter Questions

00:31

Problem 1

How much do you think you could borrow from a bank on your present stock of human capital? From your parents? From a finance company?

Christopher Dzorkpata
Christopher Dzorkpata
Numerade Educator
03:08

Problem 2

Suppose that someone owns outright a house whose current market value is $$\$ 100,000$$. If this person told you that he lived "rent free," what might you tell him to correct his delusion?

Jennifer Stoner
Jennifer Stoner
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Problem 3

What is meant by the term "rate of time preference"?

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02:41

Problem 4

Would the rate of interest on saving deposits be an appropriate measure of the rate of time preference to a person who is currently paying an interest rate of 18 percent per annum on an automobile loan? Explain your answer.

Shivani Sharma
Shivani Sharma
Numerade Educator

Problem 5

Each of us knows people who spend everything they earn as fast as they get it and also borrow as much as their friends will lend out. Does this tell you anything about the probable magnitude of these persons' rate of time preference? Explain carefully and illustrate your answer with a diagram.

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01:23

Problem 6

Some people save a positive percentage of their income throughout most of their lives. Draw a diagram to illustrate the preferences of such people as between present and future consumption.

Amrita Bhasin
Amrita Bhasin
Numerade Educator

Problem 7

Discuss the mechanics of asset accumulation for a person who is an avid collector of old coins (treat coins as goods that cost something to maintain).

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Problem 8

During much of human history, some people have been "human capital" in a literal sensethat is, marketable as slaves. What factors would enter into calculations of the market value of such capital goods? Would any of these factors be irrelevant in the case of nonhuman capital goods? Discuss.

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02:38

Problem 9

Why are you going to college? Is it costing you anything but time (and forgone income)? What does it cast your parents? What does it cast your school? Will the value of your services be increased sufficiently as a result of your education to offset its cost to you and others?

Md.Daniyal Arshad
Md.Daniyal Arshad
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