Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno's feasible frontier, Angela's biological survival constraint and her reservation indifference curve. Currently, if Angela does not work she receives a ration of 2.5 bushels from the government. Of the four depicted in the figure, which allocation strictly Pareto dominates Z? Angela's biological survival constraint Angela's reservation indifference curve 12. (c) Feasible frontier: Angela and Bruno combined (b). (d) (a) 2.5++ Z: Angela's reservation option 0. 24 Angela's hours of free time (a) b. (b) a. с. (с) d. (d) N Bushels of grain

Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno's feasible frontier, Angela's biological survival constraint and her reservation indifference curve. Currently, if Angela does not work she receives a ration of 2.5 bushels from the government. Of the four depicted in the figure, which allocation strictly Pareto dominates Z? Angela's biological survival constraint Angela's reservation indifference curve 12. (c) Feasible frontier: Angela and Bruno combined (b). (d) (a) 2.5++ Z: Angela's reservation option 0. 24 Angela's hours of free time (a) b. (b) a. с. (с) d. (d) N Bushels of grain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Angela works on farmland owned by Bruno. The diagram illustrates their joint feasible frontier. Angela's indifference curves are all assumed to have an identical slope, for any given amount of free time. This means that they are all parallel. Angela and Bruno can bargain costlessly. Bushels of grain 8 12 Angela's reservation indifference curve, IC₁ IC₂ D 0 0 16 Angela's hours of free time 20 24 Feasible frontier: Angela and Bruno combined a) Assume that Angela's reservation option is at point F. Explain the meaning of "Pareto efficient" and give two ways that we know that point F is not Pareto-efficient. Explain why moving between point F and point E would not improve efficiency. (4 marks) b) How might Angela and Bruno achieve a Pareto-efficient outcome? Explain how the negotiation might work. Use indifference curves to show where this outcome will be on the diagram. (3 marks) c) Explain why it would not be Pareto-efficient to simply aim to produce the maximum total amount of grain,…
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Consider an Edgeworth box economy, where preferences and endowments are given by. ( attached below ) In the following, use the normalization p2 = 1.(a) Find all the Pareto optimal allocations (use x1 to parameterize thePO allocations). (b) Suppose the government wants individual 1 to have the bundle x1 = (5, 9). Show whether the government can induce this outcome an equilib- rium with transfers. Find the supporting prices and transfers if possible. (c) State the Second Fundamental Theorem of Welfare and explain how the result in part (b) relates to that theorem. (d) Suppose the government does not care what bundle individual 1 gets and only wants to ensure that the individual 1 receives utility level equal to 45. Show whether this can be achieved as an equilibrium with transfers. Find the supporting prices and transfers if possible.