Consider an exchange economy with two consumers J and K and two goods F and C. Supposethe consumers have preferences with the following MRS of F in terms of CMUPMU5CJMRSFCFJandMUMRSC =CKMUŽFKwhere J, K are labels for the consumer, not powers.Suppose the economy has 24 units of good F and 20 units of good C. If consumer J is endowedwith 12 units of good F and the consumers are given a Pareto efficient allocation, how many unitsof good C will consumer ** K** be provided?

Pareto efficient refers to the level where the economic resources are allocated in the best possible…

Suppose the economy has 24 units of good F and 20 units of good C. If consumer J is endowed with 12 units of good F and the consumers are given a Pareto efficient allocation, how many units of good C will consumer **K** be provided?

Suppose the economy has 24 units of good F and 20 units of good C. If consumer J is endowed with 12 units of good F and the consumers are given a Pareto efficient allocation, how many units of good C will consumer K be provided?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider an exchange economy with two consumers J and K and two goods F and C. Suppose
the consumers have preferences with the following MRS of F in terms of C
MUP
MU
5CJ
MRS
FC
FJ
and
MU
MRSC =
CK
MUŽ
FK
where J, K are labels for the consumer, not powers.
Suppose the economy has 24 units of good F and 20 units of good C. If consumer J is endowed
with 12 units of good F and the consumers are given a Pareto efficient allocation, how many units
of good C will consumer ** K** be provided?

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