9. Consider an exchange economy, consisting of two consumers, denoted by i = A, B,who trade two commodities, denoted by j = 1,2.=(a) Assuming that consumers A and B's endowments are e (1, 2) and eB =(2, 1) respectively, construct the Edgeworth Box diagram relative to this econ-omy. With reference to the same economy, define the following notions: com-petitive equilibrium, Pareto-efficient allocation, contract curve.(b) Assume that consumers A and B's preferences are represented by the followingutility functions:u(x, x) = xu³ (x, x) = x+ In x+ 2ln xFind the equation for the contract curve; then, taking commodity 1 as thenumeraire, hence positing p₁ = 1 and denoting p2 = p, find the competitiveequilibrium allocation and price.(c) State and verify the first theorem of welfare economics.

(a) Constructing the Edgeworth Box and DefinitionsThe Edgeworth Box is a graphical representation…

Answered: 9. Consider an exchange economy,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The question is based on pure exchange economy. 1. For 45 provide the set of all outcomes that are pareto efficient. 2. For 46, provide an algebric solution if possible. Prove the result mathematically (answer for 46 is C since X is abundant) 3. For 47, provide a set of points (if exists) that will take us to the given equilibrium. Thank you.
2. can you explain how you find out each part?
True False Question, please explain
Suppose that research finds a link between high fructose corn syrup (HFCS) and obesity, which then leads American consumers to switch from HFCS products to pure cane sugar products. The graphs show the markets for cane sugar in Haiti and the United States before the studies were divulged. Shift the curves in the graphs, including the horizontal world price curve, to describe the new trade equilibrium that results after the switch in preferences of American households, and then answer the follow‑up question. Assume that the United States and Haiti are the only non‑HFCS sugar trading parties in the world and that there are no quotas, subsidies, or tariffs distorting these markets. According to your graphs, at the new equilibrium a. all Haitian cane sugar consumers benefit. b. cane sugar producers in Haiti benefit. d. cane sugar producers in the United States are worse off.
A5
Please help with #2 parts B-D
2. a. Consider an exchange economy which satisfies the conditions of the First Welfare Theorem (a competitive equilibrium is Pareto optimal and for which equilibrium exists starting from any vector of initial endorsements) Use these hypotheses to provide a quick indirect proof the Second Welfare Theorem.
Consider an economy which is in general equilibrium. Ann and Bob are (the only) two consumers in an economy. They both consume both good and good X . This implies that O d. Both statements are false. y. mu X mu y (i) The equality is important with regards to efficiency because it implies that there are no Pareto Improving trades of x and y between Ann and Bob. (ii) The equality is important with regards to efficiency because it implies that (for x and y) the prices that producers see reflect the (relative) values that consumers place on the goods. O a. Only statement (ii) is true. O b. Only statement (i) is true. O c. Both statements are true. mu mu B X B y Consider the truth of the following two statements:
Supposeg1increases, but stillc1+b1+g1<1. Using a graph of the goods market, show how we would represent an increase in the value ofg1on equilibrium output y. Be sure to label all axes, curves, and equilibrium points. Suppose instead,c1+b1+g1= 0. Is the equilibrium in the goods market still possible? If so, what is the equilibrium output? You must explain your answer to receive full credit.
1. Chapter 10 (a) In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Suppose that Tony's utility function is U₁ = G, H, and Margaret's utility function is Um Gm (Hm)2. Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. determine p, the competitive price of G, where the price of (b) = H is normalized to equal one.
Problem 3: Production-exchange economy Consider an economy with two consumers, A and B, two goods, X and Y, two factors of production, labor and capital, and two firms: firm X uses labor and capital to produce good X and firm Y uses labor and capital to produce good Y. Consumer A has no initial endowments of labor or capital but owns both of the firms. Consumer B has an initial endowment of labor Is =L>0 and an initial endowment of capital kg = K = L, but does not own any share of the firms. Both consumers i = A, B have preferences over consumption bundles can be represented by the Cobb-Douglas utility function where r; is the quantity of good X for consumer i, y; is the quantity of good Y for consumer i, and a e (0, 1) is a preference parameter. Firm X produces the output good X with a technology that can be de- scribed by the following production function: fx(lx, kx) = lx + kx, where lx is the quantity of labor and kx is the quantity of capital. Firm Y produces the output good Y with…

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