AutoSave Off HUFile HomePasteClipboardPage 1 of 1Insert Design LayoutCalibri (Body) ✓11BI U ab x₂ x² A✓FontV23 words DXType here to searchAccessibility: InvestigateDocument1 - WordA A Aa AAReferencesSMailings ReviewParagraphITSearch↓View2¶SHelpAaBbCcDc AaBbCcDc AaBbC AaBbcct AaB¶ Normal1 No Spac... Heading 1 Heading 2TitleStylesResidents of two districts, Oz and Wonderland, initially fall into two types: blue (B) and red(R). In Oz, there are 500 blue residents and 1000 red residents, while in Wonderland thereare 1000 blue residents and 500 red residents. Blue residents earn a regular passive incomeof YB = 12,000, while red residents' passive income is Y₁ = 2,000 due to their lower initialendowments. Both districts provide a local public good for their residents, G. Utility is givenby Vi23G-8, everywhere. Provision of this good takes place at the local government level, withthe amount of provision chosen by majority vote within each district.y = 4Y₁ (G + ¹) − G² for i = B, R. The cost of the local public good per resident is C =(a) If migration is costless, describe and explain the equilibrium distribution of residents acrossthe two communities, relating it to the Tiebout hypothesis.SHAMU T. (2035000)SFocusBADEIFindReplaceSelectEditingST13ODictateVAVoiceCommentsEditorShareReuseFilesXEditor Reuse Files+ 100%12:3805/06/2023

Individuals have the ability to relocate across communities depending on their preferences for the…

Answered: Residents of two districts, Oz and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Consider a monocentric model with fixed housing unit h and the utility of residents u=c, where c is the consumption of the composite goods. The budget constraint of each resident living at distance d from the CBD is c + ph = w-dt, where w is wage, p is housing rental rate, t is the unit commuting cost in distance. The city is open and free migration in and out. The external utility they obtain out of the city is ū= 10. The rental rate on agricultural land is pA. (a) Illustrate why the consumption of residents living in all parts of the city will be equalized. (b) Derive the housing rental rate (p) as a function of d, distance from the CBD, What is the slope? Draw a figure with p at the y-axis and d at the x axis. (c) Discuss how the boundary of the city is determined in this model, how would the boundary of the city respond to wage w and commuting cost t?
Answer part C please
For Questions 5–7 below, consider the following description of a two-goods economy: Assume two consumers with utility functions of the form 2/3 1/3 Y1 Y2 1/3 2/3 U* (x1, x2) = x * and UY (y1, Y2) %3D Further, assume the following initial endowments. consumer X is endowed with wX =(9,3) and consumer Y with wY = (3,9). (P1, P2) for which consumer X is a net demander in market Question 5. Determine all prices p 1 while consumer Y is a net demander in market 2.
Markets may have difficulty providing the proper quantity of a public good because individuals will tend to become free riders, and private firms will have difficulty generating enough revenue to produce an efficient quantity of the good. the good generally has a very large value to consumers relative to its cost of production. the good is one that tends to benefit a large number of people. the large profit involved in the production of a public good is generally too much for private firms to effectively pay out to shareholders.
Consider a two-good economy with one private and one public good. There are four consumers in this economy who contribute to public good provision. The price of the private good is $1 and the demand function of the public good for each consumer is as follows: p1 = 20 - 2G, p2 = 30-(5/10)G, p3 = 100-(G/2) and p4 = 60-G where G is the number of units of the public good and p^i is the price of each unit for consumer i in dollars. The cost of providing one extra unit of the public good is (alpha). (a) With 170 < alpha < 210, what is the optimal level of provision of the public good? Show the optimal point on a graph. (b) Is there a possibility that the public good is not supplied at all? Why? (c) If the public good is not supplied at all, what is the size of the deadweight loss due to this market failure? (d) If at least one person contributes, for what values of the public good will be supplied?
PLEASE ANSWER PART b) and c) only
Consider an economy with n consumers, one private good and one public good. We think of the private good as "all other goods," and measure it in terms of money. There aren individuals in the economy with utility functions Ui(xi , y) = ai In y + xi , where y is the public good, xi is the private good consumed by individual i = 1, . .., n, and 0 0. Find the optimal provision of the public good as well as how much is provided under voluntary contributions.
Amaranda and Bartolo consume only two goods, X and Y. They can trade only with each other and there is no production. The total endowment of good X equals the total endowment of good Y. Amaranda's utility function is U(xA, YA) = min{xa, YA} and Bartolo's utility function is U(XB, YB) = max{xg, YB}. In an Edgeworth box for Amaranda and Bartolo, the set of Pareto optimal allocations is O the main diagonal. O both diagonals. O the whole Edgeworth box. O the edges of the box and the main diagonal. O the edges of the box.
Consider a two-agent two-good exchange economy. Assume the utility functions are given by U'(x}, x}) = x} + 4/x} and U²(x², x3) = x² + 2/x% with endowment vectors R' = (4, 12) and R? = (8, 8). Assume good x2 is the numeraire. a. Find the competitive equilibrium allocation and prices for this pure exchange economy.
Consider an exchange economy with two types of agents, A and B, and two goods, x and y. Preferences are given by UA (XA, YA) = = A + 6 ln(y₁) and UB(TB, YB) = ln(TBYB). Suppose the government wants to reach the goal of XB = 5 with the competitive equilibrium by setting a redistribution r such that w₁ = (10,r) and wB = (0,20 - r). 1. Find r reaches the government's goal. Round your answer to 2 decimal points. Let Py = Answer:
A local government is considering building new public hiking trails in town.Suppose that the trails are public goods. There are two types of people in a smalltown economy, 1000 avid hikers and 1000 non-hikers, who have typical individualmarginal benefit curves: MB_H = 350 − 5Q and MB_N = 240 − 6Q for the hikersand the non-hikers respectively, where Q is the miles of trails. On the same graph,draw the marginal benefit curves for each type of person and MB of the overalleconomy. If the marginal cost providing this public good is $27000 per mile whatis the optimal level of the public good?
Markets and Common Resources. This problem is also called “the tragedy of the commons.” There are seven families in the village. Each family has $70 to spend on either a steer or a bond. A steer today costs $70 per steer; a bond costs $70. In one year, a family can sell their steer that uses the common grazing land (the common resource) for the village. The revenue and price received for selling a steer depend upon how many other families are selling their steers. See the demand for steers in the graph below. A family can buy one steer or buy one bond. Therefore, the number of steers is the number of families that decided to buy a steer. If a family holds the $70 in cash, the family will earn nothing. Each family has $70. If a family buys a bond today for $70, they will receive $90 in one year. A family can only earn income from raising & selling steers or from buying and holding bonds. Hint: complete the table first. How many families will want to buy a…

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