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#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-4-the-opportunity-set #study-session-4
Question

Assuming a one-period model Warren has no reason not to spend all of his income so the weak inequality becomes a strict equality, as shown in Equation 4, because there would be no reason for Warren to save any of his income if there is “no tomorrow.”

Equation (4) 

[...]
Answer
PBQB + PWQW = I

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-4-the-opportunity-set #study-session-4
Question

Assuming a one-period model Warren has no reason not to spend all of his income so the weak inequality becomes a strict equality, as shown in Equation 4, because there would be no reason for Warren to save any of his income if there is “no tomorrow.”

Equation (4) 

[...]
Answer
?

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-4-the-opportunity-set #study-session-4
Question

Assuming a one-period model Warren has no reason not to spend all of his income so the weak inequality becomes a strict equality, as shown in Equation 4, because there would be no reason for Warren to save any of his income if there is “no tomorrow.”

Equation (4) 

[...]
Answer
PBQB + PWQW = I
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not to spend all of his income so the weak inequality becomes a strict equality, as shown in Equation 4, because there would be no reason for Warren to save any of his income if there is “no tomorrow.” Equation (4)  <span>P B Q B + P W Q W = I <span><body><html>

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4. THE OPPORTUNITY SET: CONSUMPTION, PRODUCTION, AND INVESTMENT CHOICE
the expenditure on wine does not exceed his income per time period. We can represent this income constraint (or budget constraint ) with the following expression: Equation (3)  P B Q B + P W Q W ≤ I <span>This expression simply constrains Warren to spend, in total, no more than his income. At this stage of our analysis, we are assuming a one-period model. In effect, then, Warren has no reason not to spend all of his income. The weak inequality becomes a strict equality, as shown in Equation 4, because there would be no reason for Warren to save any of his income if there is “no tomorrow.” Equation (4)  P B Q B + P W Q W = I From this equation, we see that if Warren were to spend all of his income only on bread, he could buy I/P B slices of bread. Or if he were to confine his expenditure to wi

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