Consider an economy with 2 goods, H consumers and m firms. Each consumer, h, has an endowment of 2 units of good 1 and none of good 2, preferences described by a. Calculate a firm’s profit-maximizing choices, a consumer’s demands and the competitive equilibrium of the economy. b. What happens to as (i) m increases; (ii) H increases? Why? c. Suppose that each consumer’s endowment of good 1 increases to 2 + 2δ. Explain the change in relative prices. d. What is the effect of changing: i. The distribution of endowments among consumers; ii. The consumers’ preferences to
Consider an economy with 2 goods, H consumers and m firms. Each consumer, h, has an endowment of 2 units of good 1 and none of good 2, preferences described by a. Calculate a firm’s profit-maximizing choices, a consumer’s demands and the competitive equilibrium of the economy. b. What happens to as (i) m increases; (ii) H increases? Why? c. Suppose that each consumer’s endowment of good 1 increases to 2 + 2δ. Explain the change in relative prices. d. What is the effect of changing: i. The distribution of endowments among consumers; ii. The consumers’ preferences to
Chapter1: Making Economics Decisions
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Consider an economy with 2 goods, H consumers and m firms. Each consumer, h, has an endowment of 2 units of good 1 and none of good 2, preferences described by
a. Calculate a firm’s profit-maximizing choices, a consumer’s
b. What happens to 
as (i) m increases; (ii) H increases? Why?
c. Suppose that each consumer’s endowment of good 1 increases to 2 + 2δ. Explain the change in relative prices.
d. What is the effect of changing:
i. The distribution of endowments among consumers;
ii. The consumers’ preferences to 
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