. Consider a market that consists of 360 consumers, i = 1,..., 360, each with the following quasi-linear utility function Ui = M¡ + log xị over the numeraire good m (whose price is normalized to one) and x; units of good l; and 10 perfectly competitive firms, j = 1, ..., 10, that produce good l. Each firm j produces q; units of good l using c; (q;) = q² /2 units of the numeraire good. Consumers are price takers, and i's endowment of the numeraire good is wi, i = 1, ..., 360. (a) Derive the individual demand function, x; (p), and aggregate demand function, x (p), of good l. (b) Derive the individual firm supply function, q; (p), and aggregate supply function, q (p), of good l.

. Consider a market that consists of 360 consumers, i = 1,..., 360, each with the following quasi-linear utility function Ui = M¡ + log xị over the numeraire good m (whose price is normalized to one) and x; units of good l; and 10 perfectly competitive firms, j = 1, ..., 10, that produce good l. Each firm j produces q; units of good l using c; (q;) = q² /2 units of the numeraire good. Consumers are price takers, and i's endowment of the numeraire good is wi, i = 1, ..., 360. (a) Derive the individual demand function, x; (p), and aggregate demand function, x (p), of good l. (b) Derive the individual firm supply function, q; (p), and aggregate supply function, q (p), of good l.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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