Jane has 9 liters of soft drinks and 12 sandwiches. Bob, on the other hand, has 11liters of soft drinks and 8 sandwiches. With these endowments, Jane's marginal rate ofsubstitution (MRS) of soft drinks for sandwiches is 4 and Bob's MRS is equal to 3. Drawan Edgeworth box diagram to show whether this allocation of resources is efficient. If itis explain why. If it is not, what changes will make both parties better off?1.) Using the three-point curved line drawing tool, draw an indifference curve for Janewhen consuming 9 liters of soft drinks and 12 sandwiches. Label this curve U,Bob112.) Using the three-point curved line drawing tool, draw an indifference curve for Bobwhen consuming 11 liters of soft drinks and 8 sandwiches. Label this curve Up.Carefully follow the instructions above, and only draw the required objects.JaneSoft drinksSandwiches

Pareto optimal points are those defecting from which no one can be made better off without making…

Answered: Jane has 9 liters of soft drinks and 12…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please answer every part. 4. Consider an economy consisting of two individuals, Ann and Bob, and two goods, scotch and wine. Aun has 5 bottles of scoteh and 2 bottles of wine as her endowment, while Bob has 3 bottles of each. Suppose their preferences are described by the following utility functions uA(s, w) = sw and up(s, w) = s'u. Assume also that the prices of goods scotch and wine are represented by P,= 1 (scotch is the mumeraire), and P>0. a. Sketch the Edgeworth box of the economy with Ann at the lower left corner and Bob at the upper right corner; scotch on the horizontal axis, and wine on the vertical axis. Indicate the endowment point e in the box. b. Write the budget lines for Ann and Bob. e. Solve Ann's utility maximization problem. Expross Ann's optimal consumption bundle in terms of P. d. Solve Bob's utility maximization problem. Express Bob's optimal consumption bundle in terms of P. e. Define competitive equilibrium. Compute and plot the CE for this problem.
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Refer to figure. Suppose the consumer is endowed with 10 units of orange and consumes 5 units of apple. The price of the apple decreases and at the new price the consumer consumes 9 units of apple. The change in the demand for apples due to the endowment effect is equal to_____
Suppose there are two firms selling protein bars. Firm 1 sells 'AggieBars' with 10 grams of protein and firm 2 sells 'DavisBars' with 20 grams of protein. Consumers are distributed uniformly over their preferences for grams of protein between 10 and 20. Suppose firm 1 sells AggieBars for $2 and firm 2 sells DavisBars for $3. The 'cost to consumers of deviating from their optimal amount of protein is $0.20 per gram. a. What protein content does the marginal consumer (the consumer who is indifferent between AggieBars and DavisBars) prefer? The equation for finding the marginal consumer (when the range of product attribute values is 10) is V - p1 - tx m = V – p2 – t(10 – x m) 4 b. How would the proportion of consumers buying each product change if the cost to deviation from one's optimal amount of protein increased (was greater than $0.20 per gram)?
Consider a society consisting of just a farmer and a tailor. The farmer has 30 units of food but no clothing. The tailor has 60 units of clothing but no food. Suppose each has the utility function U=Fc, If the price of clothing is always $1, and the food price is currently $1, then we can conclude O the market is at a competitive equilibrium. the price of food will drop towards a contitive equilibrium. the price of food will increase towards a competitive equilibrium. O None of the above..
I need help with this home work problem.
Van brings $40 to a baseball game to spend on sodas and pizza. The following diagram shows his budget constraint: SUCES OF PIZZA 20 18 16 14 12 4 2 0 4 6 U BC 10 SODAS According to the diagram, sodas cost 5 12 14 16 18 20 each, and puzza costs $ BC ? per slice. Adjust the diagram to show how Van's budget constraint would change if he had brought more money to the ballpark (Assume the prices of sodas
Jane has 11 liters of soft drinks and 10 sandwiches. Bob, on the other hand, has 9 liters of soft drinks and 10 sandwiches. With these endowments, Jane's marginal rate of substitution (MRS) of soft drinks for sandwiches is 5 and Bob's MRS is equal to 7. Draw an Edgeworth box diagram to show whether this allocation of resources is efficient. If it is explain why. If it is not, what changes will make both parties better off? 1.) Using the three-point curved line drawing tool, draw an indifference curve for Jane when consuming 11 liters of soft drinks and 10 sandwiches. Label this curve Uj. 2.) Using the three-point curved line drawing tool, draw an indifference curve for Bob when consuming 9 liters of soft drinks and 10 sandwiches. Label this curve Uğ. Carefully follow the instructions above, and only draw the required objects. Sandwiches 0₁ Jane 11 Soft drinks Bob OB 10 Q
As an economics student your budget for meals at the university is Rs 12,000 and you have two options during the course of you studies: Eating at the university cafeteria for Rs 40 per meal Eating at the dining hall for Rs 10 per meal. b. What would happen to budget constraint if i.your income falls and budget available for meals falls to Rs 8,000. Using your diagram from part (a), show the consequences of this change, assuming both meals are ‘normal’ and label the new optimum as point B. ii. if price of dinning hall meals rises to Rs 20. Using your diagram from part (a), show the price effect and label the new optimum as point B’.
Suppose your classmate Hilary loves to eat dessert-so much so that she allocates her entire weekly budget to apple crisp and pie. The price of one bowl of apple crisp is $1.25, and the price of a piece of coconut crème pie is $5.00. At her current level of consumption, Hilary's marginal rate of substitution (MRS) of apple crisp for pie is 4. In other words, Hilary is willing to sacrifice four bowls of apple crisp for one piece of pie per week. Does Hilary's current consumption bundle maximize her utility? That is, does it make her as well off as possible? If not, how should she change it to maximize her utility? O Hilary could increase her utility by buying more apple crisp and less pie per week. Hilary could increase her utility by buying less apple crisp and more pie per week. O Hilary's current bundle maximizes her utility, and she should keep it unchanged.
The utility possibility frontier is defined as the set of maximum utility levels for all consumers that is feasible in the economy, given resource constraints and preferences. For a two-consumer economy, it is defined formally as the solution to: u (ūB) = max u A (xA) subject to ug(xB) > ūg and (xA, XB)feasible. For each of the economies above, find an equation for the utility possibilities frontier, and graph it.
(In this question we denote income by Y, not by W as in the lecture notes). The following figure shows the consumption of x and y for two market situations. We can conclude that: x is a normal good for all market situations. py is greater than px. It is not conclusive. x is an inferior good for some market situation. y is an inferior good for some market situation.

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