Homework Help is Here – Start Your Trial Now!
Business
Economics
Consider an exchange economy with A and B. For the endowment, A has (x,y) = (10,40) and B has (x,y) (20,5). Assume that both A and B have a Cobb Douglas utility function u(x,y) = xy. Say A proposes to give B 5 units of good y. What is the most x B is willing to give to A in return? 2.5 5 10 12.5 Question 2 1 pts Consider the exchange economy in question 1 again. If the price of x is $4 and the price of y is $8, then consumer A has an income of and A's optimal basket has x* = units. 320; 40 320; 45 360; 45 360; 40

Consider an exchange economy with A and B. For the endowment, A has (x,y) = (10,40) and B has (x,y) (20,5). Assume that both A and B have a Cobb Douglas utility function u(x,y) = xy. Say A proposes to give B 5 units of good y. What is the most x B is willing to give to A in return? 2.5 5 10 12.5 Question 2 1 pts Consider the exchange economy in question 1 again. If the price of x is $4 and the price of y is $8, then consumer A has an income of and A's optimal basket has x* = units. 320; 40 320; 45 360; 45 360; 40

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.5P
See similar textbooks
icon
Related questions
Question
Consider an exchange economy with A and B. For the endowment, A has (x,y) = (10,40) and B has (x,y) (20,5). Assume that both A and B have a Cobb Douglas utility function u(x,y) = xy. Say A proposes to give B 5 units of good y. What is the most x B is willing to give to A in return? 2.5 5 10 12.5 Question 2 1 pts Consider the exchange economy in question 1 again. If the price of x is $4 and the price of y is $8, then consumer A has an income of and A's optimal basket has x* = units. 320; 40 320; 45 360; 45 360; 40
Transcribed Image Text:Consider an exchange economy with A and B. For the endowment, A has (x,y) = (10,40) and B has (x,y) (20,5). Assume that both A and B have a Cobb Douglas utility function u(x,y) = xy. Say A proposes to give B 5 units of good y. What is the most x B is willing to give to A in return? 2.5 5 10 12.5 Question 2 1 pts Consider the exchange economy in question 1 again. If the price of x is $4 and the price of y is $8, then consumer A has an income of and A's optimal basket has x* = units. 320; 40 320; 45 360; 45 360; 40
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Economics (MindTap Course List)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Microeconomics
Microeconomics
Economics
ISBN:
9781337617406
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Macroeconomics
Macroeconomics
Economics
ISBN:
9781337617390
Author:
Roger A. Arnold
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS