Two individuals i {1, 2} get utility from the consumption of a private good x;...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Two individuals i € {1, 2} get utility from the consumption of a private good x; and a public good G. The utility functions are given by u(x₁, G) = ln(x;) + ln (G). The two individuals have an income of m; = 1 and can spend the income on the consumption of the private good and the private provision of the public good: m; = = xi + gi. The total amount of the public good is given by G 91 +92. = (a) Determine all Pareto-efficient allocations and explain the underlying rule. (15 points) (b) Determine the equilibrium of public good provision that will arise when both individuals decide individually (non-cooperatively) how much of the public good to provide. Is this allocation efficient? (15 points) Two individuals i € {1, 2} get utility from the consumption of a private good x; and a public good G. The utility functions are given by u(x₁, G) = ln(x;) + ln (G). The two individuals have an income of m; = 1 and can spend the income on the consumption of the private good and the private provision of the public good: m; = = xi + gi. The total amount of the public good is given by G 91 +92. = (a) Determine all Pareto-efficient allocations and explain the underlying rule. (15 points) (b) Determine the equilibrium of public good provision that will arise when both individuals decide individually (non-cooperatively) how much of the public good to provide. Is this allocation efficient? (15 points)
Expert Answer:
Answer rating: 100% (QA)
a A Paretoefficient allocation is an allocation in which it is not possible to improve the utility o... View the full answer
Related Book For
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
Posted Date:
Students also viewed these general management questions
-
Prudhoe Bay Oil Co. is having its initial public offering (IPO) of company stock. To create public interest in its stock, Prudhoe Bays chief financial officer has blitzed the media with press...
-
Prudhoe Bay Oil Co. is having its initial public offering (IPO) of company stock. To create public interest in its stock, Prudhoe Bay's chief financial officer has blitzed the media with press...
-
In a January 2000 prospectus for its initial public offering of shares, Apex Oil Discovery Co. (AODC) estimated a sizable volume of oil production based on the studies of two geologists and a test...
-
Consider sending a large file from a host to another over a TCP connection that has no loss. a. Suppose TCP uses AIMD for its congestion control without slow start. Assuming cwnd increases by I MSS...
-
A business firm has a choice of two countries in which to undertake a project. The governments of Country 1 and Country 2 are honest and corrupt, respectively, in the sense that unlike Country 2,...
-
The Fleming Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash,...
-
In a recent study involving 54 women, the mean body temperature of the women was found to be 97.2F, with a standard deviation of 0.83. Random samples of size 36 are drawn from this population, and...
-
On January 1, 2014, Valdez Company had Accounts Receivable $91,000 and Allowance for Doubtful Accounts $8,100. Valdez Company prepares financial statements annually. During the year, the following...
-
Canine Crates just paid an annual dividend of $.56 per share but plans to double that amount each year for three years. After that, the firm expects to maintain a constant dividend. What is the value...
-
You have sent confirmations to 40 customers of Berg Shovick Express, a long-time audit client experiencing some financial difficulty. The company sells specialized high-technology goods. You have...
-
The productivity ratio of the supplier is 3. The productivity ratio of the manufacturer is 5/3. For every $1 of input, what is the final output value fo this interconnected process from supplier to...
-
Supply chains are not usually designed from scratch, but evolve over time. What problems does this create? Can you suggest a better approach?
-
Can you find any examples of good logistics strategies that have given poor results because of poor implementation? What could have been done better?
-
Which areas of the world do you think will have the fastest economic development over the next twenty years? How will this affect location decisions?
-
If a company chooses a poor site it can always move to a better one. Such change is an unavoidable part of business. Do you think this is true?
-
Mathematical models for location take a simplified view and they only include the few factors that can most easily be quantified. So how useful are they for real decisions?
-
Wilson Engineering purchased a depreciable asset costing $45,000 on January 1, Year 1. The asset is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line...
-
Cable Corporation is 60% owned by Anna and 40% owned by Jim, who are unrelated. It has noncash assets, which it sells to an unrelated purchaser for $100,000 in cash and $900,000 in installment...
-
This problem demonstrates the effects of transactions on the current ratio and the debt ratio of Hillsboro Company. Hillsboros condensed and adapted balance sheet at December 31, 2009, follows. (In...
-
Duracraft Corporation is nearing the end of its first year of operations. Duracraft made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units for $1,200,000...
-
Celtic Imports is an importer of silver, brass, and furniture items from Ireland. Eileen Sullivan is the general manager of Celtic Imports. Sullivan employs two other people in the business. Mary...
-
Simplify the irrational number \(\sqrt{550}\) and express in lowest terms. Identify the rational and irrational parts.
-
Identify which of the following numbers are irrational. 1. \(\sqrt{225}\) 2. \(3 \sqrt{5}\) 3. \(\sqrt{80}\) 4. \(20-3 \pi\)
-
Determine which of the following are perfect squares. 1. 36 2. 27 3. \(\frac{9}{49}\) 4. \(\frac{12}{221}\)
Study smarter with the SolutionInn App