Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X + Y UB(X,Y) = Min(X,Y) The initial endowments are: A: X = 1; Y = 3 B: X = 5; Y = 3 Illustrate the initial endowments in and Edgeworth Box. Be sure to label the Edgeworth Box carefully and accurately, and make sure the dimensions of the box are %3D correct. Also, draw each consumer's indifference curve that runs through the initial endowments. Is this initial endowment Pareto Efficient?

Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X + Y UB(X,Y) = Min(X,Y) The initial endowments are: A: X = 1; Y = 3 B: X = 5; Y = 3 Illustrate the initial endowments in and Edgeworth Box. Be sure to label the Edgeworth Box carefully and accurately, and make sure the dimensions of the box are %3D correct. Also, draw each consumer's indifference curve that runs through the initial endowments. Is this initial endowment Pareto Efficient?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A and yд are his = XBYB, Alberto's utility function is u(xA, YA) = min{A, YA}, where consumptions of goods and y. Bella's utility function is u(XB, YB) where x³ and yß are her consumptions of goods and y. Alberto's endowment is 5 units of x and no y. Bella's endowment is 11 units of y and no x. If x is the numeraire and p is the price of y in units of x, then in a competitive equilibrium ○ 11/5 = p 11/(p+1) +2.5 = 11 O min{5, 11}+11/2p=11 O min{5, 11}+5/2p=11 ○ 5/(p+1) +5.5 = 11
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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…
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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).