ANS: T DIF: 215.Jack Spratt's utility function is U(F, L) I L. His wife's utility function is U(F, L) I F. If Jack'sinitial endowment is 10 units of F and 5 units of L and if Jack's wife's initial endowment is 6 units of Fand 10 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will be Paretooptimal only if it is at a corner of the box.ANS: F DIF: 216.Jack Spratt's utility function is U(F, L) I L. His wife's utility function is U(F, L) F. If Jack's initialendowment is 40 units of F and 20 units of L and if Jack's wife's initial endowment is 24 units of F and40 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will be Paretooptimal only if it is at a corner of the box.ANS: F DIF: 217.Jack Spratt's utility function is U(F, L) I L. His wife's utility function is U(F, L) I F. If Jack'sinitial endowment is 100 units of F and 50 units of L and if Jack's wife's initial endowment is 60 units ofF and 100 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will bePareto optimal only if it is at a corner of the box.ANS: F DIF: 2

Given information Utility function Jack Utility function U=L His wife utility function U=F Initial…

Jack Spratt's utility function is U(F, L) IL. His wife's utility function is U(F, L) F. If Jack's initial endowment is 10 units of F and 5 units of L and if Jack's wife's initial endowment is 6 units of F 15. and 10 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will be Pareto optimal only if it is at a corner of the box. ANS: F DIF: 2

Jack Spratt's utility function is U(F, L) IL. His wife's utility function is U(F, L) F. If Jack's initial endowment is 10 units of F and 5 units of L and if Jack's wife's initial endowment is 6 units of F 15. and 10 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will be Pareto optimal only if it is at a corner of the box. ANS: F DIF: 2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose there are two consumers A and B, and two goods x and y. A's utility function has the following form UA = XA - (XB)1. Which of the following is true? Consumer A's consumption of good x exhibits a negative externality. Consumer A's consumption of good x exhibits a positive externality. Consumer B's consumption of good x exhibits a negative externality. Consumer B's consumption of good x exhibits a positive externality.
Two individuals, Fred and Helen, are in an economy with no production, and each have the utility function U = 10XY. Prices of both X and Y are set at $1. Initial endowments for Fred are 10 units of X and 6 units of Y. Helen has 8 units of X and 12 units of Y. Find the general equilibrium prices and allocation, then show that the G.E. allocation is Pareto efficient.
Consider a two-good exchange economy with two types of consumers. Type A have the utility function And an endowment of 3 units of good 1 and k units of good 2. Type B has the utility function And an endowment of 6 units of good 1 and 21 - k units of good 2. a. Find the competitive equilibrium outcome and show that the equilibrium price p* = p1/p2 of good 1 in terms of good 2 is p* = 21+k/15. b. Find the income levels (MA; MB) of both types in equilibrium as a function of k. c. Suppose that the government can make a lump-sum transfer of good 2, but it is impossible to transfer good 1. Use your answer to part b to describe the set of income distributions attainable through such transfers. Draw this in a diagram. d. Suppose that the government can affect the initial distribution of resources by varying k. Find the optimal distribution of income if (i) the SWF is W = log(MA) + log(MB) and (ii) W = MA + MB.
5. Consider an Edgeworth box economy where preferences are given by u'(x},*}) = x}x and uai,) = xf, (a) Suppose the initial endowments are e' = (4,4) and e² = (1,1). Find all the Pareto optimal allocations. (b) Suppose the initial endowments are e' = (5,5) and e = (0,0). Find all the Pareto optimal allocations.
(5) A has utility function u4(x4) = x4 + x and initial endowment w4 = (3,6). Consumer B has utility function uB (xB) = xf · x% and initial endowment wB = (3,6). Consider an exchange economy with two consumers and two goods. Consumer (a) Is the initial endowment a Pareto efficient allocation? Justify your answer. (b) Find a competitive equilibrium (p, xª, x³) for the economy. (c) Construct the contract curve. A picture here is not a complete answer; you need to specify analytically the set of points that are in the contract curve.
Consider a two-agents, two goods economy, in which both agents, A and B, are represented by the following utility function: UA(1, 22) = rr2 UB(y1, Y2) = Y1y% There are w units of each good in the economy. 1. Characterize the set of Pareto optimal allocations and represent it in the Edgeworth box. The 3 units of each goods are initially share as follows: A has w units of good 1 and zero unit of good 2; B has zero unit of good 1 and w units of good 2. 2. Determine the Walrasian equilibrium 3. Represent the economy in the Edgeworth box.
Ma1. Please give only typed answer.
please if you can teach explain
9
A small exchange economy is comprised of two of individuals, A and B, and two types of goods, x, ,x,. The individuals' preferences over two goods are can be represented by the following utility functions: U*(x;,.x; ) = min (2.x,x; ) and U* (x;,x;) = min(x;.2x, ). Initial endowments are 10 x, (individual A), and 10 x, (individual B). Calculate the price ratio which yields an equilibrium in the exchange market.
Consider an Edgeworth box economy, where preferences and endowments are given by. ( attached below ) In the following, use the normalization p2 = 1.(a) Find all the Pareto optimal allocations (use x1 to parameterize thePO allocations). (b) Suppose the government wants individual 1 to have the bundle x1 = (5, 9). Show whether the government can induce this outcome an equilib- rium with transfers. Find the supporting prices and transfers if possible. (c) State the Second Fundamental Theorem of Welfare and explain how the result in part (b) relates to that theorem. (d) Suppose the government does not care what bundle individual 1 gets and only wants to ensure that the individual 1 receives utility level equal to 45. Show whether this can be achieved as an equilibrium with transfers. Find the supporting prices and transfers if possible.
In this farmers market there are two goods, Apples and Oranges (1 and 2) and two consumers, Bill and Joel (A and B). Preferences and endowments are as follows: i) Depict above in an Edgeworth box, include autarkic allocation and indifference curves ii) Identify Pareto efficient allocations using Edgeworth box iii) Šuppose p1 = 6 and p2 =8. Find optimal consumption. u* (xf, x²) = 4rf + x u® (xf, a#) = af + 4r B 2'2 112