Alex's utility is U (TAYA) = min {TAYA), where A, and YA are his consumptions of I goods and y respectively. Becky's utility function is U (TB, YB) = TBYB, where #B and y, are her consumptions of goods 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

Alex's utility is U (TAYA) = min {TAYA), where A, and YA are his consumptions of I goods and y respectively. Becky's utility function is U (TB, YB) = TBYB, where #B and y, are her consumptions of goods 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

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

please teach solve explain step by step
For example (bb, cc) = (3,6) is a bundle with 3 units of baklava and 6 units of corn. All bundles where the amount of corn and baklava are greater than or equal to zero are allowed. The utility is uu(bb, cc) = \bb + cc. For each of the following different utility functions, argue whether or not they represent the same preferences as uu(bb, cc).
There are two goods, coffee and mineral water, available in arbitrary nonnegative quantities (so the consumption set is R2+). A consumer has preferences over consumption bundles that are represented by the following utility function: u(c, m) = min{c, m} + c + m, where c is the quantity of coffee (in grams) and m is the quantity of mineral water (in liters). The consumer has wealth in Dirhams of w > 0. The price of coffee is p > 0 (in grams/Dirham) and the price of mineral water q > 0 (in liters/Dirham). Now assume that w = 100, p = 10 and q = 10. In addition to the monetarybudget constraint, the consumer has a time constraint. The consumer hasonly 100 minutes available for the consumption of both goods. It takes5 minutes/liter to consume water and and 20 minutes/gram to consumecoffee. (a) In an appropriate diagram, illustrate the consumer’s constraint set. Your diagram should illustrate the monetary budget constraint, the time constraint, and indicate the consumer’s overall…
Find the attached fie.
3. Christina loves pizza and hates burger. Her utility function is U(p – b) = p – 6", where is the number of pizzas she consumes and b is the number of burgers she consumes. John likes both pizza and burger. His utility function is U(p, b) = p + 2\b Christina has an initial endowment of no pizzas and 8 burgers. John has an initial endowment of 16 pizzas and 8 burgers. a. Graph the initial endowment and label it E b. If Christina hates burgers and John likes them, how many burgers can Christina and John be consuming at a Pareto optimal allocation? What is John's marginal utility for pizzas and burgers? Mark the locus of Pareto optimal allocations of pizzas and burgers between Christina and John on the grapsh above.
An individual's utility is given by: U (q1, q2) = a(q1)+ b(q2), where a and b are constants. When prices are P1= 4 and P2=1, the individual can only maximize utility by purchasing all good #2. When the prices are P1=3 and P2=1, the individual can only maximize utility by consuming all good #1. Which of the following statements below must be true? A. Goods #1 and #2 are complements B. a < b C. 3 < a/b <4 D. The indifference curves exhibit diminishing MRS
Question 2 2.1 A consumer has a utility function u(x1, x2) = VT1 + x2 and faces a budget constraint y = P1x1 + P2x2. Assuming an interior solution to the consumer's utility maximisation problem (i.e. excluding the possibility of any corner solutions where x = 0 or x = 0), solve for x(p, y) and x(p, y), the consumer's Marshallian demand functions. 2.2 Derive the consumer's indirect utility function. 2.3 Derive the consumer's expenditure function. 2.4 Suppose the assumption of an interior solution, as set out in question 2.1 above, is no longer maintained. Discuss how (under what conditions) a corner solution to this specific utility maximisation problem may arise (i.e. where x = 0 or x = 0). Then re-write the solutions for xi(p, y) and x(p, y) (the consumer's Marshallian demand functions), as well as the new indirect utility function v(p, y), so as to allow for the occurrence of a corner solution.
A and B consume only two goods, cider (C) and dumplings (D). A has an initial endowment of 10 bottles of C and 30 of D. Bob has an initial endowment of 50 bottles of cider and 50 dumplings. Alice’s utility function is uA(CA,DA) = 9ln(CA) + 10ln(DA), where CA and DA represent consumption of C and D, respectively. B’s utility function is uB(CB,DB) = CBXDB, where CB and DB denote B's consumption of C and D. a) Find the competitive equilibrium, i.e. the price ratio, of this exchange economy and the resulting equilibrium allocation. b) Find the expression of the contract curve for this economy and use your answer to check that the equilibrium allocation you found in (b) is indeed Pareto optimal.
Linguini and Colette consume only éclair (x,) and profiterole (x2). Linguini has utility function U4 = xfxf and Colette has utility function UB = 2xfx% . Linguini is endowed with 10 éclair (x,) and 3 profiterole (x,), while Colette is endowed with 20 éclair (x,) and 9 profiterole (x,). Draw an Edgeworth box with x, on the horizontal axis and x2 on the vertical axis. Position Linguini on the bottom left corner and Colette on the top right corner. Indicate the total number of units of x, and x2. Label the endowment allocation. Derive the equation of the contract curve, i.e., find x(x). In your graph in (a), draw the contract curve. Suppose the price of éclair (x,) is $1 and the price of profiterole (x2) is $2. Find each consumer's utility-maximizing basket. How much of each good does each consumer want to buy or sell? Are the markets in equilibrium at the given prices? Verify that Walras' law holds at these prices. Now we will solve for the competitive equilibrium. Use your solution to…
Starting with utility function U= U(X, Y) and budget constraint PxX+ PyY= M, derive the equili- brium condition using calculus.
I need help with this homework question.
4. Aaron and Burris have the following utility functions over two goods, x and y. Aaron’s utility function: UA(xA, yA) = min{xA/3, yA} Burris’s utility function: UB(xB, yB) = 9xB + 3yB Aaron’s endowment is eA = (2, 4). Burris’ endowment is eB = (10, 8). In an Edgeworth Box diagram, show which allocations are in the core. Solve for the set of Pareto optimal allocations (i.e. the contract curve) in the Edgeworth Box. Illustrate the contract curve in an Edgeworth Box diagram. Let good y be the numeraire (i.e. set py = 1 and let px = p). Solve for the Walrasian competitive equilibrium allocation and price ratio.