UC (c, w) = Inc+w. Dobbin's utility function is UD (c, w) = cw. Carmen has 38 pounds o cheese and 3 litres of wine while Dobbin has no cheese and 27 litres of wine. .Draw the Edgeworth box for Carmen and Dobbin and shade all the allocations that Pareto dominate the initial endowment. Draw the contract curve. • Find the competitive equilibrium price ratio and allocation.
UC (c, w) = Inc+w. Dobbin's utility function is UD (c, w) = cw. Carmen has 38 pounds o cheese and 3 litres of wine while Dobbin has no cheese and 27 litres of wine. .Draw the Edgeworth box for Carmen and Dobbin and shade all the allocations that Pareto dominate the initial endowment. Draw the contract curve. • Find the competitive equilibrium price ratio and allocation.
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.15P
Related questions
Question
just question 1
![1. Carmen and Dobbin consume cheese (c) and wine (w). Carmen's utility function is
UC (c, w) = ln c+w. Dobbin's utility function is UD (c, w) = c²w. Carmen has 38 pounds of
cheese and 3 litres of wine while Dobbin has no cheese and 27 litres of wine.
• Draw the Edgeworth box for Carmen and Dobbin and shade all the allocations that
Pareto dominate the initial endowment.
. Draw the contract curve.
• Find the competitive equilibrium price ratio and allocation.
2. Consider an exchange economy with two agents, Dan and Eve, and two goods, meat
(m) and cabbage (c). Initially, Dan has 60 pounds of meat and 90 pounds of cabbage
while Eve has 90 pounds of meat and 60 pounds of cabbage. Dan's utility function is
UD (mD, CD) = (mp)²cp where mp and cp are the quantities of meat and cabbage (in
pounds) he consumes and Eve's utility function is UE (mê, cê) = min{2mã, câ}, where må
and CE are the quantities of meat and cabbage (in pounds) she consumes.
(1) Draw the Edgeworth box of the exchange economy and shade all the allocations that
Pareto dominate the initial endowment.
(2) Derive the set of Pareto optimal allocations and draw the contract curve.
(3) Find the competitive equilibrium price ratio and allocation.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd5bca674-cc93-4a76-a5fe-1b7c67580cc0%2Fc8fb5807-bf29-495b-a536-0908ced47306%2Feufelf_processed.png&w=3840&q=75)
Transcribed Image Text:1. Carmen and Dobbin consume cheese (c) and wine (w). Carmen's utility function is
UC (c, w) = ln c+w. Dobbin's utility function is UD (c, w) = c²w. Carmen has 38 pounds of
cheese and 3 litres of wine while Dobbin has no cheese and 27 litres of wine.
• Draw the Edgeworth box for Carmen and Dobbin and shade all the allocations that
Pareto dominate the initial endowment.
. Draw the contract curve.
• Find the competitive equilibrium price ratio and allocation.
2. Consider an exchange economy with two agents, Dan and Eve, and two goods, meat
(m) and cabbage (c). Initially, Dan has 60 pounds of meat and 90 pounds of cabbage
while Eve has 90 pounds of meat and 60 pounds of cabbage. Dan's utility function is
UD (mD, CD) = (mp)²cp where mp and cp are the quantities of meat and cabbage (in
pounds) he consumes and Eve's utility function is UE (mê, cê) = min{2mã, câ}, where må
and CE are the quantities of meat and cabbage (in pounds) she consumes.
(1) Draw the Edgeworth box of the exchange economy and shade all the allocations that
Pareto dominate the initial endowment.
(2) Derive the set of Pareto optimal allocations and draw the contract curve.
(3) Find the competitive equilibrium price ratio and allocation.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Exploring Economics](https://www.bartleby.com/isbn_cover_images/9781544336329/9781544336329_smallCoverImage.jpg)
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)