just question 1 1. Carmen and Dobbin consume cheese (c) and wine (w). Carmen's utility function isUC (c, w) = ln c+w. Dobbin's utility function is UD (c, w) = c²w. Carmen has 38 pounds ofcheese 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 thatPareto 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 cabbagewhile Eve has 90 pounds of meat and 60 pounds of cabbage. Dan's utility function isUD (mD, CD) = (mp)²cp where mp and cp are the quantities of meat and cabbage (inpounds) he consumes and Eve's utility function is UE (mê, cê) = min{2mã, câ}, where måand 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 thatPareto 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.

Q1. A Pareto optimal allocation is one where one agent cannot be made better-off without making some…

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.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.15P

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