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

See similar textbooks

Similar questions

Suppose that consumer I has the utility function u(x,y) = x + 2y and consumer II has the utility function u(x,y) = min{x, 2y}. Consumer I initially has 12 units of y and zero units of x, while consumer II has 12 units of x and zero units of y. It is correct to state that, in competitive equilibrium, the agents' consumption basket will be:
(a) A good is a luxury if it has a budget elasticity larger than 1, (i.e., good k is a luxury if εk ≡∂qk/∂m *m/qk> 1). Show that when a good is a luxury, then if a consumer’s total budget rises, theywill raise the share of their budget they allocate to the good. (b) Suppose m is the total budget a consumer has available to spend on three electronic products,a laptop, a phone and a tablet. Can all three of these goods simultaneously be luxuries? Whyor why not?
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.
Alex's utility is U (xA, YA) = min {TA, YA}, where zA, and y, are his consumptions of %3D goods a and y respectively. Becky's utility function is U (zB, YB ) = TBYB where ap and yp are her consumptions of goods a and y. Alex's initial endowment is 20 units of x and 12 units of y. Becky's initial endowment is 12 units of x and 20 units of y. At the Walrasian equilibrium, a) Both of them consume 16 units of good y each. b) Alex consumes 8 units of good y and Becky consumes 16 units of y. c) Both of them consumes 12 units of good x each. d) Alex consumes 12 units of good x and Becky consumes 20 units of x. e) None of the above
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
Consider a two-person exchange economy in which person 1 owns 200 units of x and 100 units of y while person 2 owns 100 units of x and 200 units y. Suppose their preferences over the two goods can be represented as: U1 (x, y) = y + 50Inx U2 (x, y) = y + 150lnx 1. How much of x do they trade among each other? 2. Does the First Welfare Theorem (FWT) hold in this economy?
Zach's preferences are representable by the utility function u = 90.3927, where 9₁ and 92 denote his consumption of goods 1 and 2. (Answers to each of these questions are rounded, where required, to two decimal places.) Still assuming endowments of e₁ = 5 and e₂ = 9 and market prices p₁ = 20 and p2 = 30, what is the maximised value of Zach's utility? O Au= 6.74 O B. u = 5.39 O Cu = 5.65 O D.u = 7.56 O E. None of the above
5. Consider a two-consumer one-firm economy with a single input good and a single output good. Consumers' utility functions are u4(x4) Suppose that the input good is divisible and that wA = wB = 1/2. Suppose that the output good is indivisible (i.e., that xg, q = 0, 1, 2, ...), and that the firm's production technology is such that it requires 1 unit of input to produce one unit of output. rA + 3r and uB(xB) 4x? + x. (a) Derive the Pareto set of this economy. (b) For all Pareto-efficient allocations from (a), derive a competitive equilibrium for this economy that generates these allocations.
Suppose the consumer's utility function is given by U(x,y) = X3/5y2/5, and the exogenous variables are given by M = 500, Px = 5, and Py = 4. Price of y changes to Py = 2. What is the income effect ony?O A.-14.53O B. +14.53O C. +24.21O D. +25.79O E. None of the above Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
Suppose that the initial allocation is point a between Ross and Rosa. A. Discuss how Ross’s condition be made better off without harming Rosa (i.e., Rosa maintains her level of utility). B. Illustrate this in a separate diagram and label point/s as necessary (also, if other point/s will have to be made or incorporated).
Suppose that at a price of 25 cents per orange, 300 consumers each demand 2 oranges, and at a price of 20 cents per orange, 400 consumers each demand 4 oranges. Therefore, the market demand for oranges is at a price of 25 cents per orange and at a price of 20 cents per orange. Multiple Choice 300; 400 O 1,200; 3,200 600; 1,600 O 2; 4