. Consider an economy with the following features. • There are 100 identical consumers that derive utility from consuming three different goods: software, computers, and good m. • Each consumer decision utility function is given by U(c, s) = 4c¹/481/4+m, where e denotes the amount of computers that she consumes, s denotes the amount of software that she consumes, and m denotes the amount of good m that she consumes. cand s must be non-negative, but m can take any real value. • Computers are produced by 20 identical competitive firms with a total cost function given by 10c². • Software is produced by 40 identical competitive firms with a total cost function given by 20s². . QUESTION 1: What are the equilibrium prices for software and comput- ers in equilibrium?

. Consider an economy with the following features. • There are 100 identical consumers that derive utility from consuming three different goods: software, computers, and good m. • Each consumer decision utility function is given by U(c, s) = 4c¹/481/4+m, where e denotes the amount of computers that she consumes, s denotes the amount of software that she consumes, and m denotes the amount of good m that she consumes. cand s must be non-negative, but m can take any real value. • Computers are produced by 20 identical competitive firms with a total cost function given by 10c². • Software is produced by 40 identical competitive firms with a total cost function given by 20s². . QUESTION 1: What are the equilibrium prices for software and comput- ers in equilibrium?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

. Consider an economy with the following features.
. There are 100 identical consumers that derive utility from consuming three
different goods: software, computers, and good m.
• Each consumer decision utility function is given by U (c, s) = 4c¹/4g¹/4+m,
where e denotes the amount of computers that she consumes, s denotes
the amount of software that she consumes, and m denotes the amount of
good m that she consumes.
cand s must be non-negative, but m can take any real value.
• Computers are produced by 20 identical competitive firms with a total
cost function given by 10c².
• Software is produced by 40 identical competitive firms with a total cost
function given by 20s².
. QUESTION 1: What are the equilibrium prices for software and comput-
ers in equilibrium?

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Part A . Consider an economy with the following features. • There are 100 identical consumers that derive utility from consuming three different goods: software, computers, and good m. • Each consumer decision utility function is given by U (c, 8) = 4c¹/48¹/4+m, where e denotes the amount of computers that she consumes, s denotes the amount of software that she consumes, and m denotes the amount of good m that she consumes. cand s must be non-negative, but m can take any real value. • Computers are produced by 20 identical competitive firms with a total cost function given by 10c². • Software is produced by 40 identical competitive firms with a total cost function given by 20s². . QUESTION 1: What are the equilibrium prices for software and comput- ers in equilibrium? Part B • Suppose that there is a positive technology shock in the software industry so that that the new cost function of the software firms becomes 10s². Let C and S denote, respectively, the aggregate level of…