An Edgeworth box is shown for individuals M and N. In total, there are 100 units of good 'X' and 80 units of good 'Y' available. The endowment point 'A' represents the initial allocation of these two goods to individuals M and N. A price line is shown passing through points 'A', 'B', and 'C' that represents a given relative price. What is this current numeric price ratio shown by the line ABC? answer as a positive fraction: "a/b). At this price ratio, there is an (Enter your for good X. Given that this outcome is not a competitive equilibrium, we would expect that the price of good X will and/or the price of good Y will Graphically, the price line will

An Edgeworth box is shown for individuals M and N. In total, there are 100 units of good 'X' and 80 units of good 'Y' available. The endowment point 'A' represents the initial allocation of these two goods to individuals M and N. A price line is shown passing through points 'A', 'B', and 'C' that represents a given relative price. What is this current numeric price ratio shown by the line ABC? answer as a positive fraction: "a/b). At this price ratio, there is an (Enter your for good X. Given that this outcome is not a competitive equilibrium, we would expect that the price of good X will and/or the price of good Y will Graphically, the price line will

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 Zaharah (Z) and Quah (Q) are now at an allocation bundle where their marginal rates of substitution (MRS) are given by MRS₂ = 10 and MRSQ = 5, respectively. In general equilibrium analysis, this suggests that Andaikan Zaharah (Z) dan Quah (Q) kini berada pada sesuatu longgok alokasi di mana kadar penggantian marginal (MRS) masing-masing adalah MRS₂ = 10 dan MRSQ = 5. Dalam analisis keseimbangan am, ini menunjukkan bahawa a. both individuals have already engaged in voluntary exchange of resources kedua-dua individu telah pun terlibat dalam pertukaran sumber secara sukarela b. Zaharah's situation is better off than Quah situasi Zaharah adalah lebih baik daripada Quah there exists a basis for voluntary exchange for resources between both terdapat asas untuk pertukaran sumber secara sukarela antara kedua-duanya d. both of them are in equilibrium C.
Suppose we want to fairly allocate a set of indivisible chores, for which each agent has negative utility. What is the natural analogue of EF1 allocation in this case? Design an algorithm to obtain an EF1 allocation when agents have additive valuations.
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
Suppose a consumer has preferences between two goods that are perfect substitutes. In this case would the consumers be better off or worse off if the tax with rebate based on original consumption were in effect?
III. First Welfare Theorem: Suppose we have an endowment economy with two consumers i = 1,2. Let e' = (1,1) be the endowment for both consumers. Let preferences be given by U'(x', y'; x²) := (x'y')'/² + 7x² and U²(x², y²; y') := (x²y²)/2 + 7y'. When maximimizing utilty each consumer takes the others choices as given. Show that p* = (1, 1) is a competitive equilibrium where each consumer demands her own endowment. Find a feasible allocation that is a Pareto improvement. Why does the first welfare theorem not apply?
Lea's utility function is U = x y0.4 where x denotes her consumption of good X, y denotes her consumption of good Y. The price of good X charged by the sellers of good X is Px = 6, the price of good Y is Py = 6 and Lea's income is M = 411. How many units of good X will Lea buy to maximize her utility?
Please answer every part. 4. Consider an economy consisting of two individuals, Ann and Bob, and two goods, scotch and wine. Aun has 5 bottles of scoteh and 2 bottles of wine as her endowment, while Bob has 3 bottles of each. Suppose their preferences are described by the following utility functions uA(s, w) = sw and up(s, w) = s'u. Assume also that the prices of goods scotch and wine are represented by P,= 1 (scotch is the mumeraire), and P>0. a. Sketch the Edgeworth box of the economy with Ann at the lower left corner and Bob at the upper right corner; scotch on the horizontal axis, and wine on the vertical axis. Indicate the endowment point e in the box. b. Write the budget lines for Ann and Bob. e. Solve Ann's utility maximization problem. Expross Ann's optimal consumption bundle in terms of P. d. Solve Bob's utility maximization problem. Express Bob's optimal consumption bundle in terms of P. e. Define competitive equilibrium. Compute and plot the CE for this problem.
Suppose the household’s preferences are given the following forms: u(c)=log(c), v(l)=log(l), that ß=2/3, and that the production functions are given by: F1(L)=L1/2 and F2(K)=K1/2. a) What are the equilibrium conditions? Derive them. b) What are the quilibrium quantities?
Making sure my answers are correct
Pankti consumes two goods, x and y. Her utility function is given byU(x, y) = ln(xy).(a) Are Pankti’s preferences homothetic? Explain.
Granny lives in the Woods and consumes only bread and fruits. One week she falls ill and has to ask her niece, Red, to buy her weekly food. Red lives in the City, where the price of fruit is $ 2 per kilogram and the price of bread is also $ 2 per loaf. Red knows that Granny's utility function is given by U(f, b) = In (f) + 2 In (b) and that Granny has allocated $ 60 of her income for food each week. Heading to Granny's house in the Woods with the food bought from the City in her basket, Red unexpectedly meets the infamous trader B. B. Wolf, which offers to buy or sell food at a price of $ 3per kilogram of fruits, and $ 6per loaf of bread. Show graphically, what is the Red's budget line before meeting with Wolf and the budghet line after meeting with Wolf?
Anthony and Brandon have a utility possibility frontier that is given by the following equation: UA + 2U}? = 50. Anthony and Brandon believe that the ideal allocation is given by maximizing an appropriate social welfare function. Anthony thinks that UA = 30 and Ug = 100 is the best distribution of welfare, and presents the maximization solution to a weighted-sum-of-the-utilities social welfare function that confirms this observation. Anthony's social welfare function can be written as a) W = UA + UB b) W = UA + 10UB c) W = 10UA + UB d) W = 2UA + 10UB e) None of the above.