Consider an one person, two good, one input economy. This is "Lea's Economy". Lea's utility function is U = xb y1-1/b where b=4, x denotes her consumption of good X, and y denotes her consumption of good Y. The production function of good X is given by X = 15 Lx and the production of Y is given by Y = 2 Ly2, where Lx and Ly denote respectively the amount of labour used in the production of good X and in the production of good Y. The total amount of labour in the economy is 806. Derive the (equation for the) production possibilities frontier (PPF) of this economy. Then enter below the opportunity cost of one more unit of good X at the point where X = 15. Answer:
Consider an one person, two good, one input economy. This is "Lea's Economy". Lea's utility function is U = xb y1-1/b where b=4, x denotes her consumption of good X, and y denotes her consumption of good Y. The production function of good X is given by X = 15 Lx and the production of Y is given by Y = 2 Ly2, where Lx and Ly denote respectively the amount of labour used in the production of good X and in the production of good Y. The total amount of labour in the economy is 806. Derive the (equation for the) production possibilities frontier (PPF) of this economy. Then enter below the opportunity cost of one more unit of good X at the point where X = 15. Answer:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider an one person, two good, one input
economy. This is "Lea's Economy".
Lea's utility function is
U = xb y1-1/b
where b=4, x denotes her consumption of good X,
and y denotes her consumption of good Y.
The production function of good X is given by X = 15
Lx and the production of Y is given by Y = 2 Ly2,
where Lx and Ly denote respectively the amount of
labour used in the production of good X and in the
production of good Y. The total amount of labour in
the economy is 806.
Derive the (equation for the) production possibilities
frontier (PPF) of this economy. Then enter below the
opportunity cost of one more unit of good X at the
point where X = 15.
Answer:
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