Q4Agent A's marginal valuation of the first unit is MVA $3 and agent B's marginal valuation ofthe first unit is MVB = $4. Suppose that agent A owns one unit while agent B holds no unit.Then, assuming that each agent maximizes his/her gains from trade,A. 1 unit for agent A and O unit for agent B is an efficient allocation.B. 1 unit for agent B and O unit for agent A is an efficient allocation.C. There is mutually beneficial trading between agent A and agent B at a price of 3

The exchange of goods and services between countries, people or communities is known as the trade.…

Agent A's marginal valuation of the first unit is MVA - = $3 and agent B's marginal valuation of the first unit is MVB = $4. Suppose that agent A owns one unit while agent B holds no unit. Then, assuming that each agent maximizes his/her gains from trade, O A. 1 unit for agent A and O unit for agent B is an efficient allocation. B. 1 unit for agent B and O unit for agent A is an efficient allocation. C. There is mutually beneficial trading between agent A and agent B at a price of 3

Agent A's marginal valuation of the first unit is MVA - = $3 and agent B's marginal valuation of the first unit is MVB = $4. Suppose that agent A owns one unit while agent B holds no unit. Then, assuming that each agent maximizes his/her gains from trade, O A. 1 unit for agent A and O unit for agent B is an efficient allocation. B. 1 unit for agent B and O unit for agent A is an efficient allocation. C. There is mutually beneficial trading between agent A and agent B at a price of 3

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1i
Suppose consumer are always ready to trade k units of good X for w units of good Y. Then, which of the following utility function represents this preference? O U(X,Y) = min{wX + kY}. O U(X,Y) = wx + kY. O U(x,Y) = min(kX,wY}. U(X,Y) kX + wY.
D2
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2(b)There are three people and two goods in an economy. The utility functions and the initial bundles are given below: U = X11X 12 U2 = 2x 21+ X 22 U3 = X 31 X 3z+X 32 W; = (0,8) W;= (2,2) W3= (8,0) Suppose it is suggested that the three traders move to the allocation x given by x= (1,2), x2= (8, 4), X3= (1,4) C. Show that x is not in the core.
Another utility function is given; U(X, Y) = X.75 Y0.25 s.t. PxX+PyY=l What is the coefficient of the compensated demand function Y? Select one: O a. 0.46875 O b. 0.45875 O c. 0.42875 O d. 0.44875 O e. 0.43875
True false question. Can it be efficient for one trader to consume all units of the goods while the other trader consumes nothing? In other words, does this point lie on the contract curve?
Two individuals, Blair and Anton, derive utility from leisure and from the other goods (OG) they consume. Observing their leisure and OG choices when wage increases, we conclude that Blair has backward-bending labour supply and Anton has upward slopping labour supply. Therefore, Select all that applies a) Leisure is a normal good for Anton but an inferior good for Blair. b) Anton has only an income effect, while Blair has only a substitution effect. O C) Anton's income effect is larger than Blair's income effect, but Anton's substitution effect is smaller than Blair's substitution effect. O d) Anton's substitution effect is larger than his income effect, but Blair's income effect is larger than her substitution effect. O e) Anton's income and substitution effects are negative while Blair's income and substitution effects are positive.
Suppose that a consumer's marginal rate of substitution at her current chosen bundle is MUx/MUy=3 but she can exchange X and Y at Px/Py=5. Should she keep her current bundle, or can she make herself better off by trading at these prices? Which good will she buy, and which will she sell?
Suppose that the following Cobb-Douglas utility function is given U(X,Y) = X³y/2, Which of the following is correct? O Law of diminishing Marginal Utility holds for good Y but not for good X while Law of Diminishing Marginal Rate of Substitution holds. Law of diminishing Marginal Utility holds for good X but not for good Y while Law of Diminishing Marginal Rate of Substitution holds. Law of diminishing Marginal Utility holds for good Y but not for good X while Law of Diminishing Marginal Rate of Substitution fails to hold. Law of diminishing Marginal Utility holds for both goods and Law of Diminishing Marginal Rate of Substitution holds as well
B4
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