Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter P4, Problem 2KC
To determine
The impact of Lorenz curve lying above the diagonal.
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Where can I go to get my own wax supplies?
Problem 2. If the consumer preference can be represented by a CES function with δ = 0.5, i.e. u(x, y) = x0.5 + y0.5. Let the prices and income be (px, py, w).
1. Set up the Lagrangian expression.2. Take the first-order conditions.3. Substitute into budget constraint to derive the optimal consumption bundles.
1. A town relies on four different sources for its non-drinking water needs: dam water,
reclaimed water, rain water, and desalinated water. The different sources carry different
risks and costs. For instance, desalinated water is fully reliable due to abundant sea water,
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risk than rain or dam water since a certain amount can be obtained, even during the dry.
season, by the treatment of daily generated waste water.
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particular water source is defined as the amount of water generated by the source per
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for the four water sources are described in the following table:
Water resource
Expected return St. Deviation
Dam water
2.7481
0.2732
Reclaimed water
1.6005
0.0330
Rain water
0.5477
0.2865
Desalinated water
0.3277
0.0000
Higher…
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