lecture18-preview-demand-uses - 2007 John M. Abowd and...

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Unformatted text preview: 2007 John M. Abowd and Jennifer P. Wissink M i c r o Uses of Demand Theory (Preview) Prof. John M. Abowd October 29, 2007 2007 John M. Abowd and Jennifer P. Wissink M i c r o Themes of Todays Lecture Effect of a tax and transfer program Analysis of savings behavior Analysis of the food stamp program Analysis of a price club 2007 John M. Abowd and Jennifer P. Wissink M i c r o Savings Behavior You live for two periods: the present and the future. Your total income for the two periods is M . If you save $1 today in a savings account you will get $1(1+ r ) tomorrow. The interest rate r on your savings is positive. The price of a unit of consumption today is $1. The price of a unit of consumption tomorrow is $1. 2007 John M. Abowd and Jennifer P. Wissink M i c r o Food Stamps vs. Cash Suppose the following for the Parker family: U( F , $ Y ) where $ Y = dollars spent on all other goods I = $200 P...
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lecture18-preview-demand-uses - 2007 John M. Abowd and...

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