Consider an economy in which two commodities doors (Qi) and beds (Q2) are produced. The utility function of all consumers in the economy is given as U= qq,. The production functions for the production of doors and beds are given as q 4,-V, where x, is the input used in the production of doors and x2 is input used in producing beds. A and 92 (a) Determine the margina! rate of subsiitution (MRS) for all consumers in the economy. (3 marks) (b) Suppose x, +x, = 108, derive the Marginal Rate of Transformation (MRT) for this economy. (c) Compute the quantity of doors and beds produced and sold at which the entire economy attains equilibrium. (7 marks) (3 marks)

Consider an economy in which two commodities doors (Qi) and beds (Q2) are produced. The utility function of all consumers in the economy is given as U= qq,. The production functions for the production of doors and beds are given as q 4,-V, where x, is the input used in the production of doors and x2 is input used in producing beds. A and 92 (a) Determine the margina! rate of subsiitution (MRS) for all consumers in the economy. (3 marks) (b) Suppose x, +x, = 108, derive the Marginal Rate of Transformation (MRT) for this economy. (c) Compute the quantity of doors and beds produced and sold at which the entire economy attains equilibrium. (7 marks) (3 marks)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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