Consider the 6x6 system of equations below, of 3 goods and their respective demand and supply functions: Qd123 - 5P₁ + P₂ + P3 Qs1 = -8 + 6P₁ Qd2 15+ P₁ -3P2 + 2P3 Qs2-11 + 3P₂ Qd3 19 + P₁ +2P2 - 4P3 Qs3 = -5 + 3P3 a. Are these 3 goods substitutes or complements? Explain in detail using jargon.

Consider the 6x6 system of equations below, of 3 goods and their respective demand and supply functions: Qd123 - 5P₁ + P₂ + P3 Qs1 = -8 + 6P₁ Qd2 15+ P₁ -3P2 + 2P3 Qs2-11 + 3P₂ Qd3 19 + P₁ +2P2 - 4P3 Qs3 = -5 + 3P3 a. Are these 3 goods substitutes or complements? Explain in detail using jargon.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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E1
Assume the market clearing price is $5.00 for deli sandwiches and the amount of exchange that would take place at that price is 200 deli sandwiches per day. You, however, don't have this information and have just opened your deli. You decide to price your sandwiches at $9.00 and are willing and able to sell 285 sandwiches per day at that price. When you do this, you notice you sell 100 sandwiches per day. Draw this situation on a graph and then explain what will happen in this market -- i. e., if there is a shortage or surplus, show this on the graph and then explain what the shortage or surplus will cause to happen in the market. Make sure you talk about inventories in your answer.
Hello Please answer all except A and B) Thanks Mahboob
Please do not answer question in picture. Please demonstrate the graph as a supply and demand graph with all axes labels that include price, quantity, reason for shift depicted, original prices, and original quality.
3 Consider a pure exchange economy with 2 consumers and 2 goods. Consumer ? owns 8 units of good 1 and 1 unit of good 2, and his preference is represented by the following utility function: uA(x1, x2) = x1*x2. Consumer ? owns 2 units of good 1 and 4 units of good 2, and his preference is represented by the following utility function: uB(x1,x2)=x1+x2. Assume that the two consumers are allowed and able to trade with each other, and that good 1 is the numeraire. In this case, both consumers act as price-takers. Price takers: a market participant that is not able to dictate the prices in a market. Therefore, a price taker must accept the prevailing market price. Please find the competitive equilibrium of this pure exchange economy.
5. Consider a two-consumer one-firm economy with a single input good and a single output good. Consumers' utility functions are u4(x4) Suppose that the input good is divisible and that wA = wB = 1/2. Suppose that the output good is indivisible (i.e., that xg, q = 0, 1, 2, ...), and that the firm's production technology is such that it requires 1 unit of input to produce one unit of output. rA + 3r and uB(xB) 4x? + x. (a) Derive the Pareto set of this economy. (b) For all Pareto-efficient allocations from (a), derive a competitive equilibrium for this economy that generates these allocations.
Question 3 A certain household comprises of a couple, Adam (A) and Betty (B). They have lexicographic preferences over two goods G1 and G2 - A wants to consume as much of G1 as possible, before moving on to G2 whereas, for B, it is the opposite, she wants to consume as much of G2 as possible before moving on to G1.¹ Given their varying preferences, they decide to shop separately, after dividing the household income equally. The household income is $8. One difference to the usual setting - there are government restrictions in place so that no individual is allowed to buy more than two units of either good. Hint: Do not use mathematical brute force (like Calculus) to solve this problem. A simple diagram with appropriate budget lines, etc. should suffice. 1) Suppose prices are p= (P₁, P2) = (1,2). Denote the optimal choice of A and B as a= b= (b₁,b₂) respectively. Solve for a and b. (a1, a2) and
5) A consumer of two goods, good 1 and good 2, has a utility function u (X1, X2) = x1 0,6. X2 0,4, where x denotes units of good 1 and X2 units of good 2. The price of good 1 is 5 euros And the price of good 2 is 3 euros per unit and the consumer’s income is 150 euros. Suppose that only the price of good 1 changes and that the new price is p, ‘ = 2. Then the demand function of good 1 that is derived from the utility function is Choose one: A) X1= 0.6m/p1 B) X1= 6m/p1 C) X1= 4m/p1 D) X1= 0.4m/p1 E) Not defined
Need answers only for questions 4&5
6) A consumer of two goods, good 1 and good 2 has a utility function u (X1, X2)= X1 0,6. X2 0,4, where x1 denotes units of good 1 and X2 units of good 2. The price of good 1 is 5 euros per unit, the price of good 2 is 3 euros per unit and the consumer's income is 150 euros. Suppose only change the price of good 1 And that the new price is p, = 2. Then the Slutsky substitution effect with respect to good 1 is Choose one: A) 8.8 B) 9.8 C) Not defined D) 7.8 E) 10.8
Question 2: Suppose you have the following information about the demand and supply of cotton in the U.S.: Price 9 15 25 35 U.S. Supply 4 12 17 U.S. Demand 40 36 30 20 10 (a) Determine the equations of the supply and demand curves. Assume that the two equations are linear. (b) Determine the market equilibrium price and quantity. (c) Now suppose that the US can import an arbitrary quantity of cotton at a price of 15 Dollars. How many units will the U.S. import?
. (b) Suppose there are two Bohemian roommates with identical preferences who derive utility from the number of paintings hung on their hotel's walls (X) and the number of granola bars (Y) that they eat. The specific utility function underlying their preferences is given by: U₁ (X,Y)= X1¹³ Y₁23 (for i=1.2) mes Given that each roommate has $300 to spend and P=$100, Py = $ 0.20, explore the consequences of various expenditure allocations. In particular provide a detailed analysis of the possibility leading to free ridership Will that solution be efficient? If so or if not, why? Calculate the efficient allocation. What arrangement for cost sharing would be Pareto superior?