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Consider a small closed economy with two consumption goods: good 1 (meat) and good 2 (berries). There are two types of agents, h and g, and they have the same preferences over consumption, represented by the utility function: u(x1, x2) = In xi + In 2. However, there are twice as many type-h agents as type-g agents. The only factors of production are their labour. When a type-h agent chooses to spend a fraction a of his day producing meat and the rest producing berries then his output is (yt, y5) = (2a, 2(1 – a). A type- g agent is more productive. When she chooses to spend a fraction Bof her day producing meat and the rest producing berries then her output is (yi, y) = (33, 12(1 – B)). Normalise the price of one unit of berries (good 2) to 1, and let p be the price of one unit of meat (good 1). Which of the following statements is true?

Consider a small closed economy with two consumption goods: good 1 (meat) and good 2 (berries). There are two types of agents, h and g, and they have the same preferences over consumption, represented by the utility function: u(x1, x2) = In xi + In 2. However, there are twice as many type-h agents as type-g agents. The only factors of production are their labour. When a type-h agent chooses to spend a fraction a of his day producing meat and the rest producing berries then his output is (yt, y5) = (2a, 2(1 – a). A type- g agent is more productive. When she chooses to spend a fraction Bof her day producing meat and the rest producing berries then her output is (yi, y) = (33, 12(1 – B)). Normalise the price of one unit of berries (good 2) to 1, and let p be the price of one unit of meat (good 1). Which of the following statements is true?

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Consider a small closed economy with two consumption goods: good 1 (meat) and good 2 (berries). There are two types of agents, h and g, and they have the same preferences over consumption, represented by the utility function: u(x1, x2) = In ¤1 + In x2. However, there are twice as many type-h agents as type-g agents. The only factors of production are their labour. When a type-h agent chooses to spend a fraction a of his day producing meat and the rest producing berries then his output is (yf, y5) = (2a, 2(1 – a)). A type- g agent is more productive. When she chooses to spend a fraction B of her day producing meat and the rest producing berries then her output is (yi, y) (38, 12(1 – B)). Normalise the price of one unit of berries (good 2) to 1, and let p be the price of one unit of meat (good 1). Which of the following statements is true?
Transcribed Image Text:Consider a small closed economy with two consumption goods: good 1 (meat) and good 2 (berries). There are two types of agents, h and g, and they have the same preferences over consumption, represented by the utility function: u(x1, x2) = In ¤1 + In x2. However, there are twice as many type-h agents as type-g agents. The only factors of production are their labour. When a type-h agent chooses to spend a fraction a of his day producing meat and the rest producing berries then his output is (yf, y5) = (2a, 2(1 – a)). A type- g agent is more productive. When she chooses to spend a fraction B of her day producing meat and the rest producing berries then her output is (yi, y) (38, 12(1 – B)). Normalise the price of one unit of berries (good 2) to 1, and let p be the price of one unit of meat (good 1). Which of the following statements is true?
Consider the setup from Question 1. Remembering that there are twice as many agents of type h than those of type g, what is the equilibrium price p? О а. р— 3. O b. p = 1. О с. р— 2. O d. p= 4.
Transcribed Image Text:Consider the setup from Question 1. Remembering that there are twice as many agents of type h than those of type g, what is the equilibrium price p? О а. р— 3. O b. p = 1. О с. р— 2. O d. p= 4.
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