Assume a closed economy where Qproduced=Qconsumed. Given the production functions: x1=L1^0.43 and x2=L2^0.43, the utility function: U(x1,x2)=x1^0.32*x2^0.20, the budget constraint/iso-value line: V=p1*x1+p2*x2. What is p2/p1 (or the absolute value of the slope of the isovalue line if x1 is on the vertical axis)? Assume all workers, L, work in one of the two industries. (Answer should be to two decimal places.)
Assume a closed economy where Qproduced=Qconsumed. Given the production functions: x1=L1^0.43 and x2=L2^0.43, the utility function: U(x1,x2)=x1^0.32*x2^0.20, the budget constraint/iso-value line: V=p1*x1+p2*x2. What is p2/p1 (or the absolute value of the slope of the isovalue line if x1 is on the vertical axis)? Assume all workers, L, work in one of the two industries. (Answer should be to two decimal places.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Assume a closed economy where
Qproduced=Qconsumed. Given the
production functions: x1=L1^0.43 and
x2=L2^0.43, the utility function:
U(x1,x2)=x1^0.32*x2^0.20, the budget
constraint/iso-value line: V=p1*x1+p2*x2.
What is p2/p1 (or the absolute value of the
slope of the isovalue line if x1 is on the
vertical axis)? Assume all workers, L, work in
one of the two industries. (Answer should
be to two decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe14b1e71-faf4-476d-8b0a-000244f64ab7%2F1016fac0-d140-4761-b71d-6168ab4b02e3%2F5awhor_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume a closed economy where
Qproduced=Qconsumed. Given the
production functions: x1=L1^0.43 and
x2=L2^0.43, the utility function:
U(x1,x2)=x1^0.32*x2^0.20, the budget
constraint/iso-value line: V=p1*x1+p2*x2.
What is p2/p1 (or the absolute value of the
slope of the isovalue line if x1 is on the
vertical axis)? Assume all workers, L, work in
one of the two industries. (Answer should
be to two decimal places.)
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