Suppose Lou's demand for good X is given by XL =74 - P/6 and Dora's demand for good X is given by XD =129 -P/4 where x; denotes the quantity demanded by person i, i=L, D and P denotes the price of the good. Now suppose good X is not sold in stores. You have a total 34 units of good X and wish to divide between Lou and Dora. Determine the efficient allocation of this amount. Then calculate the efficiency loss of the allocation where each person gets half this amount, i.e., gets 34/2 and enter the value of the efficiency loss below.

Suppose Lou's demand for good X is given by XL =74 - P/6 and Dora's demand for good X is given by XD =129 -P/4 where x; denotes the quantity demanded by person i, i=L, D and P denotes the price of the good. Now suppose good X is not sold in stores. You have a total 34 units of good X and wish to divide between Lou and Dora. Determine the efficient allocation of this amount. Then calculate the efficiency loss of the allocation where each person gets half this amount, i.e., gets 34/2 and enter the value of the efficiency loss below.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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