Question

In: Economics

Lori is a student who teaches golf on the weekend and in a year earns ​$30,000...

Lori is a student who teaches golf on the weekend and in a year earns ​$30,000 after paying her taxes.
At the beginning of 2016 ​, Lori owned ​$2,500 worth of​ books, DVDs, and golf clubs and she had ​$3,000 in a savings account at the bank.
During 2016 ​, the interest on her savings account was ​$150 and she spent a total of ​$ 20,000 on consumption goods and services. The market value of her​ books, DVDs, and golf clubs did not change.
  
How much did Lori save in 2016 ​? What is her wealth at the end of2016 ​?
In 2016 ​, Lori saved ​$ HOW MUCH?
​Lori's wealth at the end of 2016 is ​$ HOW MUCH

Solutions

Expert Solution

Lori's saving is difference between the disposable income and consumption expenditure.

Disposable income = Income - taxes + inetrest earn.
Disposable income = $30,000 + $150
Disposable income = $30,150
Saving = Disposable income - Consumption expenditure

Saving = $30,150 - $20,000
Saving = $10,150
Lori save $10.300 in 2016

(b) Lori wealth at the end of 2016 = Wealth in the begining of 2016 + Saving made during 2016

Wealth in the begining of 2016 = Value of books, DVDs, golf clubs + money in saving account.
Wealth in the begining of 2016 = $2,500 + $3,000 = $5,500
Lori wealth at the end of 2016 = $5,500 + $10,150
Lori weath at the end of 2016 = $15,650


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