Question: Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions:

Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions:

Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions: W = 10 W = 6 W = 4 W3 = 12 UA(X,Y)= XY! UB (X,Y)= XY! a) (16 points) Using a clearly and accurately labeled Edgeworth Box, illustrate: the initial endowment, labeled "W" . Each consumer's indifference curve at "W" The contract curve The general equilibrium point, labeled "D" (you will have to come back to this later in the problem) the budget constraint (you will have to come back to this later in the problem) b) (10 points) Suppose the price of Y is Py = 1. Calculate the value of each consumer's initial endowment after solving for the price of good X that will lead to a competitive equilibrium. Show your work. You may want to use part of the next page or the blank space on the front page to do your work. Write your final answers in the blanks below MB -

Step by Step Solution

★★★★★

3.38 Rating (145 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Answer Consumer A Initial endowmentsof good X and good Y 44 Utility function Min 2X Y PX 2 PY 1 Income of the consumer PXX PYY where X and Y are the e... View full answer

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 Accounting Questions!

Suppose there are two commodities A and B with strongly negatively correlated daily returns, such as a stock and gold. Is it possible to find another commodity with daily returns that are strongly...

Suppose there are two countries, Busytown and Lazyasiwannabe, with the following production possibility tables: a. Draw the production possibility curves for each country. b. Which country has the...

Suppose there are two possible income distributions in a society of ten people. In the first distribution, nine people have incomes of $30,000 and one person has an income of $10,000. In the second...

Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions. (8 points} For the situation above, determine for each...

1.(24 points) Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions. Consumer A: X = 1 Y = 7 UA(X,Y) = MIN (X,Y)...

2. (24 points) Suppose there are two consumers, A and B, and two goods, X and Y.The consumers have the following initial endowments and utility functions Consumer A: X = 5 Y = 2 U A (X,Y) = MIN...

1.(24 points) Suppose there are two consumers, A and B, and two goods, X and Y.The consumers have the following initial endowments and utility functions Consumer A: X = 1 Y = 7 U A (X,Y) = MIN (X,Y)...

2. (24 points) Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions Consumer A: X =5 Y =2 UA (X,Y) = MIN (2X, Y)...

annssw Consider a two person exchange economy with preferences for person i {1,2} being u(c) and endowments being w, where c = (cc) and the endowment for person 1 is wi (w1,0) with w > 0, and for...

Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions Consumer A: X = 1 Y = 7 UA (X,Y) = MIN (X,Y) Consumer B: X...

Using the binomial table, find the probability of: (a) Four successes in 13 trials when p = .3. (b) Eight failures in 13 trials when p = .7. (c) Eight successes in 13 trials when p = .3. Explain why...

Jhon McDonald is a production manager of a company that manufactures machine parts for a heavy machinery firm. Jhon joined the company 12 years back and introduced a performance-based payment system...

Which of the following is NOT a result of sponsors presenting and defending their own IT requests? Question 1 5 options: Assessment of trade - offs between IT and non - IT investments Accountability...

Show that EQ CFG is undecidable.

Assuming that a and b are variables of type int, fill in the following table: b Math.pow(a, b) Math.max(a, b) a / b a %b Math. floorMod (a, b) a 3 3. -3 3 -2 -3 -3 -2 2. 2. 2. 2.

James Company began the month of October with inventory of $15,000. The following inventory transactions occurred during the month: a. The company purchased merchandise on account for $22,000 on...

On April 15, 2023, a 10-year note dated June 15, 2018, is discounted at 10% compounded quarterly. If the face value of the note is $4000 and interest is 8% compounded quarterly, calculate the...

Write a program that reads in two floating-point numbers and tests whether they are the same up to two decimal places. Here are two sample runs. Enter two floating-point numbers: 2.0 1.99998 They are...

how can you respond to this discussion: The grade level I chose is third-graders, they are just beginning to understand foundational ideas about data that is based on the California Common Core State...

Suppose that everything in the grade insurance market is as described in exercise 22.1. But instead of taking the asymmetric information as fixed, we will now ask what can happen if students can...

In Graph 9.4, we illustrated how you can derive the labor supply curve from a consumer model in which workers choose between leisure and consumption. A: In end-of-chapter exercise 3.1, you were asked...

Demand for Charities and Tax Deductibility: One of the ways in which government policy supports a variety of activities in the economy is to make contributions to those activities tax deductible. For...

2. When interacting with people who are not native English speakers, it may be a good idea to pay extra attention to the nonverbal behaviors. How much do you notice facial expressions, gestures, tone...

3. Nonverbal misinterpretations. Misunderstandings in relation to the interpretation of nonverbal behaviors can easily lead to conflicts or confrontations that break down the communication process.

3. Describe what research has demonstrated concerning the concept of foreign language processing difficulties.