we have two consumers Ava and Ben, this time with preferences: UA = min(2x, x2) and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
we have two consumers Ava and Ben, this time with preferences: UA = min(2x₁, x2) and U³ = x² + x² Total endowments are E₁ E₂ = 10. The initial endowment is at ef = e = 4, ef = e² = 6 a. Draw the Edgeworth box in the graph below on the left. Mark the initial endowment allocation, and draw the indifference curves that pass through it. Is the endowment allocation Pareto efficient? Explain. b. d. Now suppose prices in the market are P₁ = 2, P₂ = 1. In the graph on the right, draw the Edgeworth box again, with the same endowment point, and add the budget line suggested by these prices. Label the intersections. a. and b. OB x₁=1 OB Good 2 0A Draw the contract curve. Does it contain both origin points? Explain. -10 Good 1 e co contract curve Good 2 C. Ava's optimal choice (x1=3,x4-6) e Ben's optimal bundle when=2(x=4, x2 =10) P₂ 10 0A Good 1 Is there a competitive equilibrium on this budget line (that is, for this endowment and these prices)? Explain. we have two consumers Ava and Ben, this time with preferences: UA = min(2x₁, x2) and U³ = x² + x² Total endowments are E₁ E₂ = 10. The initial endowment is at ef = e = 4, ef = e² = 6 a. Draw the Edgeworth box in the graph below on the left. Mark the initial endowment allocation, and draw the indifference curves that pass through it. Is the endowment allocation Pareto efficient? Explain. b. d. Now suppose prices in the market are P₁ = 2, P₂ = 1. In the graph on the right, draw the Edgeworth box again, with the same endowment point, and add the budget line suggested by these prices. Label the intersections. a. and b. OB x₁=1 OB Good 2 0A Draw the contract curve. Does it contain both origin points? Explain. -10 Good 1 e co contract curve Good 2 C. Ava's optimal choice (x1=3,x4-6) e Ben's optimal bundle when=2(x=4, x2 =10) P₂ 10 0A Good 1 Is there a competitive equilibrium on this budget line (that is, for this endowment and these prices)? Explain.
Expert Answer:
Answer rating: 100% (QA)
Solutions Step 1 c The budget line for consumer A is given as p1x1 A p2x2 A p1e1 A p2e2 A Assuming t... View the full answer
Related Book For
Fundamentals Of Thermodynamics
ISBN: 9781118131992
8th Edition
Authors: Claus Borgnakke, Richard E. Sonntag
Posted Date:
Students also viewed these mechanical engineering questions
-
Discuss the two major factors that determine the market nominal risk-free rate (NRFR). Explain which of these factors would be more volatile over the business cycle.
-
Discuss the general factors that determine the rate of growth of any economic unit.
-
Discuss the main factors that determine the amount of market power Multi choice as a firm has within a market. Over the past few years, South Africa has recorded booming financial figures. Given the...
-
3. In this problem the bond sells for a premium, which indicates that interest rates have declined. The current yield is $70/$1,222 = 5.73%. To confirm that interest rates have declined, determine...
-
Over sufficiently long periods of time, why is the total amount of an employers pension expense equal to the cash the employer pays into a pension plan instead of the cash the pension plan pays...
-
The following are the inventories for the years 2013, 2014, and 2015 for Parry Company: Required: 1. Assume the inventory that existed at the end of each year was sold in the subsequent year. Prepare...
-
Investigative accounting activities in the FBI grew dramatically during what 20th century. conflict?
-
Suppose the amounts presented here are basic financial information (in millions) from the 2014 annual reports of Nike and adidas. Instructions Calculate the accounts receivable turnover and average...
-
Waterway Company sells one product. Presented below is information for January for Waterway Company. Jan. 1 Inventory 119 units at $4 each 4 Sale 98 units at $8 each 11 Purchase 141 units at $6 each...
-
2. The Global Tea and Organic Juice companies have merged. The following information has been collected for the "Consolidation Project." Chapter 7 Managing Risk 245 Activity Description Predecessor a...
-
Applied Software has a $1,000 par value bond outstanding that pays 10 percent interest with annual payments. The current yield to maturity on such bonds in the market is 8 percent. Use Appendix B and...
-
Cam lives in edmonton alberta. he is leasing a new car for 2 years. cam has a downpayment is @ 3 3 7 plus taxes. the valuw of the car at the end of the lease is $ 2 7 4 0 8 plus taxes. cam will...
-
solve the algebra equation 1 2 q - 2 1 q ^ 2 - 6 q ^ 3 = 0
-
In preparation for the quarterly cash budget, the following revenue and cost information have been compiled. Prepare and evaluate a cash budget for the month of October based on the information shown...
-
solve by quadratic formula 4 x 2 - 4 x - 1 5 = 0
-
Obama, Bush, and Clinton are forming a partnership. Obama is transferring $ 1 5 0 , 0 0 0 of personal cashand $ 5 0 , 0 0 0 of accounts receivable to the partnership. Bush is contributing land, a...
-
You find yourself in a remake of "Back to the Future" - with the twist that there is actual time travel this time. You are in the year 2032. Sadly, as opposed to your favorite celebrity, you run into...
-
Define the term utility software and give two examples.
-
Find the specific volume for carbon dioxide at 0C and 625 kPa.
-
A rigid tank holds 0.75 kg ammonia at 70C as saturated vapor. The tank is now cooled to 20C by heat transfer to the ambient temperature. Which two properties determine the final state? Determine the...
-
A power plant produces 25 kg/s steam at 3 MPa, 600C in the boiler. It cools the condenser with ocean water, so the condenser exit is at 50C. A reheat is done at 500 kPa up to 400C followed by...
-
6. Olivetti Office U.S.A., Inc., was located in Newington, Connecticut, and its workers were represented by the United Automobile, Aerospace, and Agriculture Implement Workers of America. The...
-
9. ETHICS The chapter refers in several places to the contentious issue of subcontracting. Make an argument for management in favor of a company's ethical right to subcontract, and one for unions in...
-
8. Labor Day is a national holiday originally intended to celebrate the contributions of working men and women. But for most people today it simply means a day off from work-or the day before school...
Study smarter with the SolutionInn App