Suppose You Have $400,000 Saved Up and Purchase a Medium-Sized

question 39

Essay

Suppose you have $400,000 saved up and purchase a medium-sized house for $200,000.Consider the following 2 scenarios:
i.The very next day,the prices of all houses,including the one you have just bought,double.
ii.The very next day,the prices of all houses,including the one you bought,fall by half.
Show that both scenarios increase your utility.

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Definitions:

Indian Population

Refers to the demographic population of indigenous peoples of the Americas or the population of India, dependent on context.

Hispaniola

An island in the Caribbean Sea, divided into the sovereign states of Haiti and the Dominican Republic.

European Diseases

Infectious diseases brought to the Americas by European explorers and colonists that had devastating impacts on indigenous populations due to lack of prior exposure and immunity.

Gold and Silver

Precious metals that have been traditionally used as currency, in jewelry, and for industrial purposes due to their value and properties.