For the next three questions, assume that there are two economy that have utility functions U (x,y)=2¹/21/2 The two consumers begin with equal endowments of the two goods 4 = 2 = 1 = 8 = 50 3. If the price of z and y were both set to 1, there would be tio must be less than 1
For the next three questions, assume that there are two economy that have utility functions U (x,y)=2¹/21/2 The two consumers begin with equal endowments of the two goods 4 = 2 = 1 = 8 = 50 3. If the price of z and y were both set to 1, there would be tio must be less than 1
Microeconomics A Contemporary Intro
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Author:MCEACHERN
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Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 6QFR
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![For the next three questions, assume that there are two consumers in an
economy that have utility functions
UA(2,3)=2¹/42/4
U" (x,y)=1¹/2¹/2
The two consumers begin with equal endowments of the two goods
=== e = 50
29. If the price of z and y were both set to 1, there would be
(a) An excess demand for r so the equilibrium price ratio must be less than 1
(b) An excess supply of r so the equilibrium price ratio must be less than 1
(c) An excess demand for y so the equilibrium price ratio must be greater than 1
(d) An excess supply of y so the equilibrium price ratio must be greater than 1
(e) No excess supply or demand for either good, so the equilibrium price ratio is 1
30. What is the equilibrium price ratio?
(a) 2/3
(b) 5/2
(c) 3/5
(d) 1
(e) None of these
31. Consumer A increases his endowment of both goods to 100 (e = e = 100). This will
cause
(a) No change in the equilibrium price ratio
(b) The equilibrium price ratio to increase, causing consumer B to decrease their
consumption of z
(c) The equilibrium price ratio to increase, causing consumer B to increase their
consumption of z
(d) The equilibrium price ratio to decrease, causing consumer B to increase their
consumption of r
(e) The equilibrium price ratio to decrease, causing consumer B to decrease their
consumption of z](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F746539cd-d690-4ce8-b404-c7d81b15d60b%2F33f1a810-1d82-4b80-8613-5d1a71e28c46%2Fpaswne8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:For the next three questions, assume that there are two consumers in an
economy that have utility functions
UA(2,3)=2¹/42/4
U" (x,y)=1¹/2¹/2
The two consumers begin with equal endowments of the two goods
=== e = 50
29. If the price of z and y were both set to 1, there would be
(a) An excess demand for r so the equilibrium price ratio must be less than 1
(b) An excess supply of r so the equilibrium price ratio must be less than 1
(c) An excess demand for y so the equilibrium price ratio must be greater than 1
(d) An excess supply of y so the equilibrium price ratio must be greater than 1
(e) No excess supply or demand for either good, so the equilibrium price ratio is 1
30. What is the equilibrium price ratio?
(a) 2/3
(b) 5/2
(c) 3/5
(d) 1
(e) None of these
31. Consumer A increases his endowment of both goods to 100 (e = e = 100). This will
cause
(a) No change in the equilibrium price ratio
(b) The equilibrium price ratio to increase, causing consumer B to decrease their
consumption of z
(c) The equilibrium price ratio to increase, causing consumer B to increase their
consumption of z
(d) The equilibrium price ratio to decrease, causing consumer B to increase their
consumption of r
(e) The equilibrium price ratio to decrease, causing consumer B to decrease their
consumption of z
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