Question: As in lecture, assume that the national utility function is the same in each country and given by a Cobb-Douglas formula: U(M,F)=M12F12. This makes 1

As in lecture, assume that the national utility function is the same in each country and given by a Cobb-Douglas formula: U(M,F)=M12F12. This makes 1 F2 MUM 1 and MUF 1 M 2 2 M 2 2 b. What is the formula for the Marginal Rate of Substitution? MU= du = u(x1 + x1, X2) - u(X1, X2) dx 1 Ax1 c. In autarky, what is the production/consumption levels of M and F in Holland? In Sweden? d. What is the utility level for Holland in Autarky? For Sweden? e. Plot the excess demand and excess supply curves for Machinery at world price ratios (P=Pm/Pf) betgreater than 1. (As part of this, you'll need to determine which country is the excess demander and which is the excess supplier for M.) f. At what price ratio does excess demand equal excess supply for Machinery? g. At the price ratio you found in part f, how much Furniture is exchanged across the countries? h. After trade, what is the utility level for Holland? For Sweden

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Suppose that player B rather than player A gets to move first in the sequential game described in this chapter. Draw the extensive form of the new game. What is the equilibrium for this game? Does...

3. (Full Ricardian Model: Basic (30 points)) Consider 2 countries, Holland and Sweden (H and S). The marginal productivities of one year of labor in the industries Machinery (M) and Furniture (F) are...

3. (Full Ricardian Model: Basic (30 points)) Consider 2 countries, Holland and Sweden (H and S). The marginal productivityes of one year of labor in the industries Machinery (M) and Furniture (F) are...

2. (Budget Line: 20 points) Refer to the following graph to answer the following questions. Production and Consumption in the Country H clothing 60 The gure above gives H's international trading...

Consider 2 countries, Holland and Sweden (H and S). The marginal productivityes of one year of labor in the industries Machinery (M) and Furniture (F) are given in the following table: Marginal...

3. (Full Ricardian Model: Basic (30 points)) Consider 2 countries, Holland and Sweden (H and S).The marginal productivities of one year of labor in the industries Machinery (M) and Furniture (F) are...

3. (Full Ricardian Model: Basic (30 points)) year of labor in the industries Machinery (M) and Furniture (F) are given in the following table: Each country has a population of 10 million people, all...

3. (Full Ricardian Model: Basic (30 points)) Consider 2 countries, Holland and Sweden (H and S).The marginal productivities of one year of labor in the industries Machinery (M) and Furniture (F) are...

(Full Ricardian Model: Basic (30 points)) Consider 2 countries, Holland and Sweden (H and S).The marginal productivities of one year of labor in the industries Machinery (M) and Furniture (F) are...

1.(Ricardian PPF: 20 points) Suppose the U.S. needs 20 units of labor to make a 100 tons of steel and 30 units of labor to produce 900 feet of lumber. In Canada, 20 units of labor are required to...

Show alll the steps Problem 3. (Technology) Suppose a producer has access to the technology given by the Cobb-Douglass production function y = 3K1 14. a) What can you say about the returns to scale...

A tank containing water and pressurized air is connected to a manometer as shown below. The listed heights are h1 = 6.2 in, h2 = 6.7 in, and h3 = 8 in. If the measured barometric pressure is 14.42...

Potentially Dilutive Securities Peyton has the following potential dilutive securities: $4,000,000 in bonds payable 10%, 20 year. Every $1,000 bond can convert to 5 shares of common stock. Preferred...

1. The names of three accounting jobs include all but: a. logistics manager. b. accountant. c. bookkeeper. d. accounts payable clerk.

Risky Asset A B E(r ) 9% 5% (std dev) 20% 10% 0.15 *Rate on Treasure bills (risk-free rate of return) is 2% Given your clients risk assessment survey, you feel a portfolio with moderate risk would be...

LO3.7 (Appendix) Illustrate how supply and demand analysis can provide insights on actualeconomy situations.

13. last word What explains why millions of economic resources tend to get arranged logically and productively rather than haphazardly and unproductively?

LO3.2 Describe demand and explain how it can change.