# Question

Suppose there are two consumers, A and B. The utility functions of each consumer are given by:

UA(X,Y) = X *Y

UB(X,Y) = X + 2Y

The initial endowments are:

A: X = 2; Y = 6

B: X = 2; Y = 2

a) Using an Edgeworth Box, graph the initial allocation and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and accurately.

b) What is the marginal rate of substitution for consumer A at the initial allocation?

c) What is the marginal rate of substitution for consumer B at the initial allocation?

d) Is the initial allocation Pareto Efficient? If so, simply say “It is Pareto Efficient”. If not, propose a trade between the two consumers that would make them both better off. Be specific.

UA(X,Y) = X *Y

UB(X,Y) = X + 2Y

The initial endowments are:

A: X = 2; Y = 6

B: X = 2; Y = 2

a) Using an Edgeworth Box, graph the initial allocation and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and accurately.

b) What is the marginal rate of substitution for consumer A at the initial allocation?

c) What is the marginal rate of substitution for consumer B at the initial allocation?

d) Is the initial allocation Pareto Efficient? If so, simply say “It is Pareto Efficient”. If not, propose a trade between the two consumers that would make them both better off. Be specific.

## Answer to relevant Questions

Assess both Patriot and British strengths and weaknesses when the Revolution began. How did the United States win the War against such a powerful adversary?Write the equation of a line with slope 1 through (1, 2). Discuss what the economist intends to teach you about cost using this cost function. The economist for the “Grand Corporation has estimated the company’s cost function, using time series data, to be:TC = 50 + 16Q – 2Q2 ...Sample Evaluation. In the most recent local election between two candidates, you heard your local news anchor indicates that your preferred candidate had 48 percent of the vote with a margin for error (precision) of + - 6 ...Write a five-paragraph essay (2–3 pages) on one of the poems for this lesson: “The Seafarer,” “The Wanderer,” or “The Wife’s Lament.” Your essay should discuss and illustrate the theme of exile. In your ...Post your question

0