Question 4: Finding Contract Curve and Competitive equilibrium PriceIn a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utilityfunctions. Suppose that Trinity's utility function is Ur = Gr Hr, and Miyoung's utility function is UM =GM (HM)². Between them, they own 100 units of G and 50 units of H.a. Solve for their contract curve.b. Determine P, the competitive price of G, where the price of H is normalized to equal one.

The economic situation does not always remain favorable for every individual in the market. The…

Question 4: Finding Contract Curve and Competitive equilibrium Price In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Suppose that Trinity's utility function is U = G, H, and Miyoung's utility function is UM = GM (HM)². Between them, they own 100 units of G and 50 units of H. a. Solve for their contract curve. b. Determine P, the competitive price of G, where the price of H is normalized to equal one.

Question 4: Finding Contract Curve and Competitive equilibrium Price In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Suppose that Trinity's utility function is U = G, H, and Miyoung's utility function is UM = GM (HM)². Between them, they own 100 units of G and 50 units of H. a. Solve for their contract curve. b. Determine P, the competitive price of G, where the price of H is normalized to equal one.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.6P

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In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Suppose that Tony’s utility function is UT = GTHT and that Margaret’s utility function is UM = GM(HM)2. Between them, they own 100 units of G and 50 units of H. a. Please solve for their contract curve. b. Please solve for the demand functions for the two goods for both Tony and Margaret, assuming p is the competitive price of G, and the price of H is normalized to equal one.
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4. )In a pure exchange economy with two goods, G and H, the two traders have Cobb- Douglas utility functions. Suppose that Tony's utility function is U, = G.H; and Margaret's utility function is Um= Gm(Hm)³. Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. Continuing with question 4, determine p, the competitive price of G, where the price of H is normalized to equal one.
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Question 4: Finding Contract Curve and Competitive equilibrium Price In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Suppose that Trinity's utility function is UT = GT HT, and Miyoung's utility function is UM GM (HM)². Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. a. b. Determine P, the competitive price of G, where the price of H is normalized to equal one. =
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There are two goods, Computers and Wheat, and two factors of production, capital and labor. Production in both sectors satisfies constant returns to scale. Production of computers is relatively more capital-intensive. Both input and final goods markets are competitive. Goods are freely traded internationally, but factors are immobile across countries. We will focus our analysis on the Home country. In the initial equilibrium, the Home country produces both computers and wheat, but only exports wheat. In our analysis, we will consider the following sequence of time-frames: . In the short run, both factors are completely specific to their initial sectors of employ- ment. (i.e. both factors are used to produce both goods, but in the short run it is impossible to relocate the factors that are currently in use for production) • In the medium run, capital is specific but labor can relocate. • In the long run, both factors are mobile across sectors. • In each run, the prices of factors adjust…
There are two goods, Computers and Wheat, and two factors of production, capital and labor. Production in both sectors satisfies constant returns to scale. Production of computers is relatively more capital-intensive. Both input and final goods markets are competitive. Goods are freely traded internationally, but factors are immobile across countries. We will focus our analysis on the Home country. In the initial equilibrium, the Home country produces both computers and wheat, but only exports wheat. In our analysis, we will consider the following sequence of time-frames: In the short run, both factors are completely specific to their initial sectors of employ- ment. (i.c. both factors are used to produce both goods, but in the short run it is impossible to relocate the factors that are currently in use for production) . In the medium run, capital is specific but labor can relocate. . In the long run, both factors are mobile across sectors. • In each run, the prices of factors adjust…