Suppose there are two consumers, A and B. There are two goods, X and Y. There is a TOTAL of 9 units of X and a TOTAL of 9 units of Y. The consumers' utility functions are given by: UA(X,Y) = 3X + Y %3D UB(X,Y) = X2 Y %3D For Each of the following allocations, answer True if it is Pareto Efficient, and False if it is not Pareto Efficient. [ Select ] Allocation A: Consumer A gets X = 7 and Y =6; Consumer B gets X = 2 and Y = 3. [ Select] Allocation B: Consumer A gets X = 6 and Y =7; Consumer B gets X 3 and Y = 2 %3D [ Select ] Allocation C: Consumer A gets X = 2 andY =0; %3D Consumer B gets X = 7 and Y = 9 %3D [ Select ] v Allocation D: Consumer A gets X = 1 andY =0; Consumer B gets X 8 and Y = 9 %3!

Suppose there are two consumers, A and B. There are two goods, X and Y. There is a TOTAL of 9 units of X and a TOTAL of 9 units of Y. The consumers' utility functions are given by: UA(X,Y) = 3X + Y %3D UB(X,Y) = X2 Y %3D For Each of the following allocations, answer True if it is Pareto Efficient, and False if it is not Pareto Efficient. [ Select ] Allocation A: Consumer A gets X = 7 and Y =6; Consumer B gets X = 2 and Y = 3. [ Select] Allocation B: Consumer A gets X = 6 and Y =7; Consumer B gets X 3 and Y = 2 %3D [ Select ] Allocation C: Consumer A gets X = 2 andY =0; %3D Consumer B gets X = 7 and Y = 9 %3D [ Select ] v Allocation D: Consumer A gets X = 1 andY =0; Consumer B gets X 8 and Y = 9 %3!

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please answer the question fully and completely else I will rate negative, thanks! Question 3 Consider an economy with two consumers, A and B, two goods called 1 and 2 and one firm. Consumers A and B are each endowed with a unit of each good. The utility functions of each consumer are: A: 13 4 4 u (x₁‚x2 ) = lnx₁ + Inx2 B:u ₁₂ (x, ‚ x 2 ) = x, x 2 The firm B 1 A 1 1 2 produces good 2 using good 1 as an input, according to the production function f(y) = y where y is the quantity of good 1. Consumer A is the sole shareholder of the firm and the firm operates to maximize profit. Page 2 If P₁ and P2 determine the utility maximizing demand of consumer are the per unit prices of goods 1 and 2, . B for each good as a function of p, and P2 · If P₁ P 2 1 and are the per unit prices of goods 1 and 2, determine the profit maximizing demand of the firm for good 1 as a function of p₁ and p2. Ifp, and p2 are the per unit 1 prices of goods 1 and 2, determine the utility maximizing demand of consumer…
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Consider the pure exchange economy with 2 goods, good 1 and good 2, and two consumers, consumer A and consumer B. The consumers have the following utility functions: UA(X1A,X2A)=X1A+3x2A; UB(X1B,X2B)=x1B +X2B. Consumer A is initially endowed with 4 units of good A and no unit of good 2, that is, consumer A's initial endowment is (W1A,W2A)=(4,0). Consumer B is initially endowed with 3 units of good 2 and no unit of good 1, that is, (WIB,W2B)=(0,3). In order to implement the allocation (x1A,X2A)=(0,1), (x1B,X2B)=(4,2) as a Walrasian equilibrium, what transfer of wealth should we make between the consumers if good 1 is the numeraire, that is, if p1 =1? O a. An amount 7 of wealth should be transferred from consumer A to consumer B. O b. None of the other answers. An amount 3 of wealth should be transferred from consumer A to consumer B. O c. d. An amount 3 of wealth should be transferred from consumer B to consumer A. An amount 7 of wealth should be transferred from consumer B to consumer…
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Consumer equilibrium exists when: P/MU of all goods is the same MU/P for all goods is the same TU/P for all goods is the same the MU for all goods is the same
Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 3 units of good X and 5 units of good Y. Consumer B is given an initial endowment of 5 units of good X and 3 units of good Y. Consumer A's utility function is given by: UA(X,Y)= X + 4Y, and consumer B's utility function is given by UB(X,Y)= MIN (X, 2Y). If the prices are Px = 1 and Py = 3, if each consumer sells her initial endowment and buys back her optimal bundle, which of the following statements is true? Group of answer choices Both Markets are in Equilibrium There is Excess Demand in the Market for Good X = 2.4 There is Excess Demand in the Market for Good Y = 0.8 There is Excess Supply in the Market for Good Y = 1.6 There is Excess Supply in the Market for Good X = 1.6 E
3 Consider a pure exchange economy with 2 consumers and 2 goods. Consumer ? owns 8 units of good 1 and 1 unit of good 2, and his preference is represented by the following utility function: uA(x1, x2) = x1*x2. Consumer ? owns 2 units of good 1 and 4 units of good 2, and his preference is represented by the following utility function: uB(x1,x2)=x1+x2. Assume that the two consumers are allowed and able to trade with each other, and that good 1 is the numeraire. In this case, both consumers act as price-takers. Price takers: a market participant that is not able to dictate the prices in a market. Therefore, a price taker must accept the prevailing market price. Please find the competitive equilibrium of this pure exchange economy.
2(b)There are three people and two goods in an economy. The utility functions and the initial bundles are given below: U1 = X11X 12 U = 2x 21+ X 22 U3 = X 31 X 3z+X 32 W; = (0,8) W;= (2,2) Wy= (8,0) Suppose it is suggested that the three traders move to the allocation x given by x;= (1,2), x2= (8,4), X3= (1,4) b. Show that x makes no one worse off than the original allocation.