Bill and Hillary confront the same market prices for health care and hamburgers. Bill’s optimal consumption point is a corner equilibrium where he consumes only hamburgers; Hillary’s optimal point involves consumption of both health care and hamburgers. Are their MRSs equal? Does the distribution lie on the contract curve? Support your answer by constructing the relevant Edgeworth box.
Answer to relevant Questions“Private markets ration goods among consumers in an efficient way.” Explain what this statement means. Does it imply that there is no basis for thinking that some other distribution would be better? State the law of diminishing marginal returns. How is it illustrated by the data in the table of the preceding question? There is a proviso to this law that certain things be held constant: What are these things? Give ...Define isoquant. What is measured on the axes of a diagram with isoquants? What is the relationship between the isoquant map and the production function?Using the data from Question, construct the following relationships: (a) the average amount of labor used per unit of output at each level of output, and (b) the additional amount of labor required for each additional unit ...What are the four assumptions of the perfectly competitive model? Critics are fond of pointing out that few, if any, real- world markets satisfy all four conditions, implying that the competitive model has little relevance ...
Post your question