Assume a closed economy whereQproduced=Qconsumed. Given theproduction functions: x1=L1^0.43 andx2=L2^0.43, the utility function:U(x1,x2)=x1^0.32*x2^0.20, the budgetconstraint/iso-value line: V=p1*x1+p2*x2.What is p2/p1 (or the absolute value of theslope of the isovalue line if x1 is on thevertical axis)? Assume all workers, L, work inone of the two industries. (Answer shouldbe to two decimal places.)

Answered: Assume a closed economy where…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the past, Andy received a university scholarship of Rp2,000,000 per month to purchase textbooks (B) and daily needs (L). At that time, Andy maximized his utility by spending Rp500,000 for textbooks and Rp 1,500,000 for daily needs, Now graphically show the allocation of the scholarship that maximized Andy's utility (B on the horizontal axis and L on the vertical axis) and interpret it!
QUESTION 35 Following from the model described in the previous question. What is the budgt constraint facing the individual, and what is the optimal condition for individual choices of consumption and fertility? 1 The budget constraint is wt- pn; = C;i The optimal condition is Ct pnt 1 The budget constraint is w, -p= C;; The optimal condition is Ct nt 1 The budget constraint is Wt-p3 Ct; The optimal condition is Ct %3D The budget constraint.is w -p-n;= C; The optimal condition is Ct = Opn;
Good Y H A E F BC1 BC2 D Good X Describe what would cause the budget constraint to shift from BC1 to BC2.
If the consumer's budget constraint is given by 4P + 2B = 50 where P is Pizza and B is Burgers, the following bundles of Pizza and Burger would be on the budget constraint: P = 5; B = 10 P = 2; B = 21 P = 10; B = 20 %3D P = 2; B = 24
Q3
Note: Dashed drop lines will automatically extend to both axes. OFFEE (Millions of pounds) 32 28 COFFEE (Millions of pounds). 24 20 16 0 32 28 24 20 16 0 PPF 4 12 PPF 0 The following graph shows the same PPF for Sylvania as before, as well as its initial consumption at point A. As you did for Candonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. (?) 4 O True 8 O False Candonia 4 12 20 16 GRAIN (Millions of pounds) 24 Sylvania 12 20 16 GRAIN (Millions of pounds) 28 24 32 28 Consumption After Trade 32 (? + Consumption After Trade True or False: Without engaging in international trade, Candonia and Sylvania would have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)
Good Y H A B F `BC1 BC2 Good X If BC2 is the relevant budget constraint, which of the identified bundles (combinations of X and Y goods) can this consumer afford?
Bartholomew and Agatha are each endowed with 15 units of food and 15 units of clothing. For Bartholomew, the two goods are perfect substitutes, i.e., U³ = FB + C³. For Agatha, the two goods are perfect complements, i.e., Uª = min{F^, 2C^}. Do all of the following in just one graph or chart: Draw an Edgeworth box (with the correct dimensions). Note: Assign clothing on the vertical axis (label it "C") and food on the horizontal axis (label it "F"). Assign Agatha's origin at the lower left corner, while Bartholomew's at the upper right. Plot the endowment point and label it "w". Plot Agatha's indifference curve that passes through w. Label the indifference curve "Agatha". Plot Bartholomew's indifference curve that passes through w. Label the indifference curve "Bartholomew". Shade the region or set of all Pareto-improving allocations relative to w. What is its shape? Draw the contract curve and answer this: Is it a straight line or not? [Hint: The contract curve in this case does not need…
u (#1, #2) = x}x; If the price of good 1 is $4/unit, the price of good 2 is $9/unit, and income = $164... What is this person's optimal consumption level for good 2?
Consider an economy that has a labor endowment of L = 40 units. The production functions are x = 0.5L, and y = 4Ly, where x and y are consumption goods while L, and Ly represent the labor allocation. What is the equation for the PPF? 8x + y = 160 6x + 2y = 80 6x + y = 120 8x + 2y = 80
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