Consider a 2-good, 2-agent pure exchange economy where there are 10 units of each good and preferences are represented by UA, UB: R30 →R where UA (XA) = 2XA1 + XA2 and uB (XB) = XB1 + 2XB2- Which 2 of the following 8 options are true: (If you wish to change your response, please untick your selected answer before selecting another answer.) There are initial endowments from which we can have a Walrasian Equilibrium with prices p = (1, 0). O The only Pareto efficient allocation is XA = (10, 0), XB = (0, 10). Every Pareto efficient allocation can be supported as a Walrasian Equilibrium after some reallocation of resources. We cannot apply the First Welfare Theorem because preferences violate local non-satiation. The allocation XA = (5, 10), XB = (5, 0) is Pareto efficient. For all price vectors PER²0, we have p₁z₁ + P2z2 = 0 where z; is the excess demand of good i € {1, 2}. 0 Preferences of both players satisfy strict convexity. At initial endowment eд = (5, 5), eg = (5, 5), there is a Walrasian Equilibrium with prices p = (1, 2).

Consider a 2-good, 2-agent pure exchange economy where there are 10 units of each good and preferences are represented by UA, UB: R30 →R where UA (XA) = 2XA1 + XA2 and uB (XB) = XB1 + 2XB2- Which 2 of the following 8 options are true: (If you wish to change your response, please untick your selected answer before selecting another answer.) There are initial endowments from which we can have a Walrasian Equilibrium with prices p = (1, 0). O The only Pareto efficient allocation is XA = (10, 0), XB = (0, 10). Every Pareto efficient allocation can be supported as a Walrasian Equilibrium after some reallocation of resources. We cannot apply the First Welfare Theorem because preferences violate local non-satiation. The allocation XA = (5, 10), XB = (5, 0) is Pareto efficient. For all price vectors PER²0, we have p₁z₁ + P2z2 = 0 where z; is the excess demand of good i € {1, 2}. 0 Preferences of both players satisfy strict convexity. At initial endowment eд = (5, 5), eg = (5, 5), there is a Walrasian Equilibrium with prices p = (1, 2).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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