Consider a 2-good, 2-agent pure exchange economy with complete markets (no externalities) and let the initial endowment be eд= (10, 10), eg = (20, 10). Which 2 of the following 8 options are false: At prices p = (1, 1) both agents' budget sets are subsets of the Edgeworth box. O 21 If preferences are represented by UA, UB: RR where uA (XA) = XA1 XA2 and us (X) = x₁x2 then the initial endowment is Pareto efficient. If Andy has strongly monotonic preferences then the bottom left corner of the Edgeworth box, OA, is Pareto efficient. The Edgeworth box is 30 units wide and 20 units high. If in Walrasian Equilibrium players trade to XA = (14, 8), XB = (16, 12) then Walrasian Equilibrium prices must be p = (1, 2). If Andy has strongly monotonic preferences then the top right hand corner of the Edgeworth box, Og, is Pareto efficient. If Andy has strongly monotonic preferences then it is impossible to have a Walrasian Equilibrium where one of the prices equals 0. If preferences are represented by UA, UB: RR where uA (XA) = XA1 XA2 and uB (XB) = XB1XB2 then in Walrasian Equilibrium the price of good 2 must be higher than the price of good 1

Consider a 2-good, 2-agent pure exchange economy with complete markets (no externalities) and let the initial endowment be eд= (10, 10), eg = (20, 10). Which 2 of the following 8 options are false: At prices p = (1, 1) both agents' budget sets are subsets of the Edgeworth box. O 21 If preferences are represented by UA, UB: RR where uA (XA) = XA1 XA2 and us (X) = x₁x2 then the initial endowment is Pareto efficient. If Andy has strongly monotonic preferences then the bottom left corner of the Edgeworth box, OA, is Pareto efficient. The Edgeworth box is 30 units wide and 20 units high. If in Walrasian Equilibrium players trade to XA = (14, 8), XB = (16, 12) then Walrasian Equilibrium prices must be p = (1, 2). If Andy has strongly monotonic preferences then the top right hand corner of the Edgeworth box, Og, is Pareto efficient. If Andy has strongly monotonic preferences then it is impossible to have a Walrasian Equilibrium where one of the prices equals 0. If preferences are represented by UA, UB: RR where uA (XA) = XA1 XA2 and uB (XB) = XB1XB2 then in Walrasian Equilibrium the price of good 2 must be higher than the price of good 1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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