Suppose there are two consumers, A and B.The utility functions of each consumer are given by:UAIX,Y) =X'YUBIX,Y) = x+Y3Therefore:• For consumer A: MUx = Y; MUY = XFor consumer B: MUx = Y³; MUY = 3XY²The initial endowments are:A: X 8; Y=6B: X 14; Y 17a)b)Suppose the price of Y, Py = 1. Calculate the price of X, Px that will lead to a competitive equilibrium.How much of each good does each consumer demand in equilibrium?Consumer A's Demand for X:Consumer A's Demand for YConsumer B's demand for XConsumer B's demand for Yc) 1What is the marginal rate of substitution for consumer A at the competitive equilibrium?

Utility Functions:(UA(X,Y)=X⋅Y)(UB(X,Y)=X⋅Y3) Marginal Utilities: For consumer A:…

Answered: Suppose there are two consumers, A and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consider a two-person exchange economy in which initial endowments for both individuals are such that (e1 = e1) = (1,1). Suppose the two individuals have the following indirect utility functions: V1 (x, y) = ln M1 - a ln Px - (1-a) ln Py V2 (x, y) = ln M2 -b ln Px - (1-b) ln Py Where Mi is the income level of person i and Px and Py are the prices for goods x and goods y, respectively. a) Calculate the market clearing prices.
QUESTION 1 Alice (A) and Bob (B) have an endowment of goods 1 and 2, with Alice's endowment being (wt, w) = (1,2) and Bob's endowment equals (wf , w) = (1,3). Alice's utility is given by u4 (xf, xf) = 2 ln xf + In æ£ , while Bob's utility is uB(xf, x}) = ln xf + 2 ln x? . Suppose that the social planner considers it to be imperative that agent B consumes exactly one uni of good 1 and four units of good 2. Although the social planner can not force the individuals to a particular consumption, they can enforce transfers of good 1 between the consumers (transfers of good 2 are not enforceable by the social planner). What transfer of good 1 would guarantee that in the resulting competitive Walrasian equilibrium consumer B consumes one unit of good 1 and four units of good 2? Answer this please Select one: O a. One half unit of good 1 has to be transferred from agent A to agent B. O b. There is no endowment for which agent B would consume x = 1 and x = 4 in the corresponding competitive…
Assume that the preferences of a consumer can be expressed by the utility function 0.75 utx), 4 + x (i) Show that based on this utility function, the demand functions are for the benefits provided by 81 p x = 4 3 81 р; т and x P2 P der 1 p is the price per unit 1 x, 2 p is the price per unit 2 x and m are the income of the consumer. (ii) Explain what is meant by the cross-price elasticity of a good. Calculate the cross-price elasticity of the goodigiven in question (i), and give an interpretation of the result.
I need help with this study question for my exam
Preferable step by step answer not written on paper ...typed answer pls
Market research revealed that the customers can be separated into 5 groups according to their preferences over bundles of goodxs x and y. The respective empirical utility functions were constructed and they look as follows: 1. U1(x,y) = 2x+5y. 2. U2(x,y) = 100/(2x+5y). 3. U3(x,y) = 3(2x+5y)0.5 4. U4(x.y) = 7(2x+5y)². 5. U5(x,y) = -150/(2x+5y). How many different preferences were identified by the market research. O 1 O 3
Person A has a utility function of and person B has a utility function Agent A and agent B have identical endowments of (1/2,1/2). (a) Illustrate this situation in an Edgeworth box diagram. (b) What is the equilibrium relationship between p1and p2? (c) What is the equilibrium allocation?
Can you please help awnser 8 d I have attached awnser to 8 a to make it easier to understand and complete. Thank you
3.
Part 1: Illustrate general equilibrium and the Laffer curve in the context of a repre- sentative consumer with a utility function: U(C.I) = In(C) + In() that he or she maximises subject to a constraint: C= w(1 – t)(h – 1) + * where w, h,1, C,t and a are wages, hours of time available, leisure, consumption, tax rate, and dividend income. The production function for this economy is given by Y = C+G = A(h - 1)/2 Assume that h = 1, A =1 and that the government has a balanced budget. (a) Find the equilibrium by matching the Marginal Rate of Substitution to the Marginal Rate of Transformation and then substitute into the constraint. Also take into account that profits are non-zero for this setup. (b) Plot the government tax revenue for 0
9
Consider an economy with 2 goods and 2 agents. The Örst agent has the utilityfunction, u (x1; x2) = ln x1 + 2 ln x2, and the other one has u (y1; y2) = 2 ln y1 + ln y2.The aggregate endowments of the 2 goods are given by (50; 100). Suppose there is asocial planner who cares about agents equally.(a) Set up the plannerís problem b) Calculate the first-best outcome (i.e., the social plannerís solution).

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS