Consider the following pure exchange economy with different consumer pref- erences and endowments (e.g., @A= (w, w)), and answer the following ques- tion: (a) Draw the Edgeworth box and the endowment point. (b) Find the contract curve v₁ = f(x), and plot it on the graph.
Q: 5. Consider the cost function for a firm with the production function from above, F(K, L) = K0.5 +…
A: We need to find whether this production function exhibits decreasing, decreasing, or constant…
Q: y functions of the FED include: All that Apply) Hint: There are 4 correct answers. uct monetary…
A: United State's central bank and monetary authority is Federal Reserve System or FED The Fed gives…
Q: constraint optimization 1. a. use the substitution method. given the production function,…
A:
Q: An investment of $3523 is made at the beginning of each month for 5 years and 10 months. How much…
A: Total months(n) =years*12+months=5*12+10=70 interest rate per month (r)=1% Amount invested per month…
Q: Use the table and graph below to answer the following question: identify the ATC, AVC, and MC…
A: In the mentioned question we have been asked which curve is AVC, ATC and MC. Also it is asked which…
Q: Take a look at the figure below: Price Ps+ Pp This diagram shows a positive consumption; Qs negative…
A: Positive externalities are benefits to a third party who are not directly involved in a transaction.…
Q: 1) Given the above data about the U.S. economy (assume anything not listed is equal to zero): a What…
A: In macroeconomics, the money supply refers to the total volume of currency held by the public at a…
Q: After watching the Frontline video and reviewing several articles about college athletes, what is…
A: Case synopsis: NCAA (National Collegiate Athletic Association) is a governing body of collegiate…
Q: Describe the concept of price elasticity? Why it is for a monopoly less profitable to act in markets…
A: Neoclassical economic theory places a high value on the concept of elasticity, which aids in the…
Q: Would this transfer increase, decrease, or have no effect on income inequality in this group?…
A: Income: It refers to the money which people earn. The income is used by people to purchase things in…
Q: risk-neutral worker can choose Low or High effort. The manager cannot observe the worker's action,…
A: The expected cost is the chance that a specific price will be multiplied by that cost, and the…
Q: Change of own product price may shift the entire demand curve. Select one: O True O False
A: Demand - it is the quantity demanded of a good that a consumer is desiring to purchase during a…
Q: Would consumers have to pay the price for increasing minimum wage?
A: Increasing the minimum wage changes the structure of the youth workforce. Lower-skilled teens are…
Q: “The Federal Open Market Committee today voted to raise its target for the federal funds rate by 25…
A: Monetary and fiscal policies are both employed to control economic activity over time. Monetary…
Q: An initial deposit of $10,000 at a ratio of 10% from currency in circulation, will lead to a maximum…
A: Given Initial deposit D=$10,000 Required reserve ratio =10% In the money market, there are two…
Q: QUESTION 1 All of the following are categories of economic resources except: O Land O Interest rate…
A: Economic resources: the inputs used for producing and distributing goods and services.
Q: The annual worth for years 1 through infinity of $50,000 now, $10,000 per year in years 1 through…
A: Annual worth: The yearly worth is the net of the relative multitude of advantages and costs caused…
Q: The discount rate changed from 1.75% (March 4, 2020) to 0.25% (March 16, 2020) Source: Federal…
A: Discount rate is the rate at which central bank of a country lends money to commercial bank for…
Q: What are the Principles of Public Debt Management?
A: Introduction - Getting control of your bills is the process of debt management.It entails keeping…
Q: Consider the supply and demand functions graphed below. 10 5 2 17 Р Demand 20 50 80 Supply 100…
A: Equilibrium occurs at the intersection of demand and supply curves, where quantity demanded equals…
Q: In the last six months, the price of fuel for cars has increased very substantially in many…
A: Price elasticity of demand refers to the percentage change in the quantity of the good demanded with…
Q: 9) Consider a credit boom where bank lending increases a) What is likely to happen to the money…
A: Commercial bank with the help of primary deposit create the credit and in Credit boom situation…
Q: A company is considering two pieces of equipment. Equipment A has a first cost of $80,000, AOC of…
A: The Annual Worth method is often used when comparing alternatives. As per annual worth, all receipts…
Q: -09 k You just got closed out of an economics course you need to graduate and need to persuade the…
A:
Q: Where does the demand for loanable funds come from in a closed economy? How does a government…
A: Closed economy: A closed economy is one that does not engage in international commerce, which means…
Q: A drug dealer knows whether his supply is high quality (@ = H), mediocre (@ = M), or low quality (@…
A: According to the probable structure of the differentiation and the classification of the quality in…
Q: The Trouser Company has fixed costs of 2,400 per week. In addition, we have some information about…
A: The followings are the formula to calculate the AVC, AC, and MC: Average Variable Cost (AVC) =…
Q: Q2. You are choosing between two-goods, X and Y, and your marginal utility from each is as shown in…
A: A consumer is said to maximize its utility for two or more goods when the last penny spent on all…
Q: R4
A: Given thatp=48-qTherefore, q=48-pq=3formula forprice elasticity of demand=dq/dp×p/q
Q: What are the objectives of fiscal policy in developing countries?
A: Fiscal policy refers to the government policy of spending and taxation. The government makes changes…
Q: Kaiser High price Low price Alcoa A High price $400, $500 с $525, $200 B Low price $175, $575 D…
A: Alcoa and Kaiser have been cooperating for the past two months - both have been setting high prices,…
Q: Role of government and financial intermediaries in the recovery – fiscal and monetary policies.…
A: Recovery is the phase after recession. Government and financial intermediaries play a key role in…
Q: 13. Consider the nation of Wetland. In every year for the last five years those who produced swords…
A: Law of demand: It refers to a law under which when the price of things increases people will reduce…
Q: What are the economic arguments in favour of the policy of protection? Write any three arguments.
A: Protectionism is the policy adopted by the domestic countries to protect their economies from the…
Q: Galvanized Products is considering purchasing a new computer system for their enterprise data…
A: The external rate of return or ERR is defined as the rate of return for a project where the excess…
Q: What are the two kinds of Indian budget?
A: A government budget is the statement which shows the estimated expenditure and receipts of the…
Q: When price is greater than marginal cost for a firm in a competitive market, O marginal cost must be…
A: Please find the answer below. MARGINAL COST: In economics, the marginal cost is the change in…
Q: Two sport utility vehicles (SUVS) are being considered by a recent engineering graduate. Using the…
A: Considering the given values, we build the following table giving the weights to each attribute…
Q: a. When a firm imposes an external social cost (negative externality), the government should impose…
A: When the production or consumption of a product incurs a cost to a third party, it is referred to as…
Q: A trust fund is to be formed by depositing $4,000 every six months for 25 years in a bank that…
A:
Q: Which of the following statements is true about the difference between monopoly and monopolistic…
A:
Q: 24. From a macro perspective, high income, mass-producing nations (such as the United States and…
A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…
Q: Briefly set out economic factors which might lead naturally to a depreciation of the domestic…
A: Depreciation of domestic currency means fall in the relative value of home currency with respect to…
Q: Russia’s invasion of Ukraine is causing energy prices to soar in the euro area (at an annual rate of…
A: The Russian invasion of Ukraine has led to a rise in the energy prices in euro area. The rise in the…
Q: Suppose that there is a checkable deposit into YourBank. Which of the following statements is an…
A: The required reserve ratio is the fraction of checkable deposits that need to be kept as a reserve…
Q: King Richards deposit of Php 495 earns 3% interest compounded annually. How much money is in the…
A: First, convert R as a percent to r as a decimal r = R/100 r = 3/100 r = 0.03 rate per year, Then…
Q: Could you kindly include a graphical analyses..
A: GDP is a monetary indicator of the market worth of all the finished goods and services produced in a…
Q: Don Solomon wants to set up a scholarship program with his alma mater. If P742998 is needed per year…
A: Given information Amount needed for scholars per year (A) =742998 Rate of interest (i)=2.5% We have…
Q: QUESTION 11 Consider the following sequential game, where Player 1 plays first, and then Player 2…
A: Subgame perfect equilibrium is the one of the way to solve the game to find out the nash equilibrium…
Q: Suppose a Cobb-Douglas Production function is given by the function: P(L,K)=8L^0.7K^0.3 Furthemore,…
A: Given Production function: PL,K=8L0.7K0.3 ...... (1) Cost function:…
Please help with #1 part D
Step by step
Solved in 2 steps
- In an exchange economy, there are two people (Shadi and Nino) and two goods (x1 and x2). Their initial endowments are ωS = (2, 4) and ωN = (3, 6). Their utility is given by the following functions: US(x1,x2) = x12x23 and UN(x1,x2) = x1x24. Which of the following is the equation for the contract curve? Group of answer choices a. x2N = 96x1N / (15 + 4x1N) b. x2N = 47x1N / (8 + 4x1N) c. x2N = 91x1N / 5 d. x2N = 16x1N / (3 + x1N) e. x2N = 41x1N / (9 + x1N)Problem 3: Consider a pure exchange economy with two consumers (4 and B) and two goods (X and Y). Suppose consumers A and B have the utility functions: UA (XA, YA) u³ (XB, YB) = a1-a 81-8 = XBYB a. Derive the equation of the contract curve. b. Let the endowments of the economy be 1 unit of X and 2 units of Y. Show that an equal division of goods (an egalitarian outcome) is not Pareto optimal. What condition on the parameters of the utility functions is required for equal division of goods to be Pareto optimal? 0 < a < 1 0 < 3 <1 3Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences are described by the Cobb-Douglas Utility function: U, = B!³ C?3 1/3 S. Andrew's preferences are given by: UA = B}{²C}2 ´A Assume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA = 10, Bs = 20, CA = 20 and Cs= 10. What is the equilibrium price of computers relative to bikes (p)? %3D %D
- 1. Consider the following pure exchange economy consisting of two consumers with the following utility functions and initial endowments: uz (X11, X12) = X11 +x12 uz(X21, X22) = x21 + X22 W1 = (3,1) W2 = (1,3) a. Find the set of Pareto optimal allocations, PO(Ep). (12p) b. Find the set of individually rational allocations, IR(Ep). (12p) c. Find the set of core allocations, C(Ep). (10p)Is the following statement correct: "For any two-person exchange economy, if each consumer has a complete, transitive and convex preference relation, then every competitive equilibrium allocation is efficient"? Provide a proof of your argument. [For this question, maximum word limit is 80.]Consider a two-people, two-goods exchange economy, where Person A and Person B have the following utility functions. In which case, the Pareto optimal allocation can be on the boundary of the Edgeworth box? Note: Do not consider the origins as the boundary points. (Boundary points are the edges of the Edgeworth box except for the origins.) 0 UA = min (XA1, XA2) and Ug = Xg1.Xg2 (i) UA = log(xA1) + log(Xa2) and ug = 3Xgt + X82 (ii) uA = (XA1) 0XA) and ug = 3log(Xgy) + X82 %3! (iv) uA = (XA1)2 + XA2 and ug = log(xa1) + Xe2
- 4) Consider a pure exchange economy with two goods, (x, y), and two consumers, (1, 2). Consumers' endowments are e1 = (4, 2) and e? = (6, 6) And their preferences are represented by utility functions: u(x, y) = x³y and u(x,y) = x³y$ (d) Set up the utility maximization problem for each consumer and solve for their Marshallian demand functions. (e) Compute the market demand for each good. () State the Walrus law for this economy and explain its economic interpretation. (g) Assume the excess demand for good x is zero, i.e., EDx = 0, and calculate the ratio of prices, i.e., p Ipy . Then, use this ratio of prices to show that the excess demand for good Yis also zero, i.e., EDy= 0. Briefly explain how this relates to the Walrus' law. (h) Given the price ratio found above, calculate the equilibrium allocations and show that feasibility, individual rationality, and Pareto efficiency holds.2. Consider a two person pure exchange economy with two divisible goods: : a consumer can consume any positive amount of any good The goods are; x1 and x2. The utility function are u' (x1, x2) = x1+Vx2, and u?(x1, x2) = x1 + x2, and the initial endowments are el Pi = 1, compute the competitive equilibrium for this economy. It is to say that you need to find the vector of prices, and allocations that sustain the Walrasian equilibrium. (25, 75) and e? = (75, 25). AssumingSuppose that 2 agents, A and B, have preferences over goods 1 and 2: u+(x4) 2x + x5 and u (x³) = xFx. Total endowments are ej = B B Total endowments are e¡ = e2 = 4, (a) Find the contract curve. (b) If initial endowments are e4 = A (4,0) and eB (0, 4), what is the core?
- (4) Resource Allocation. Consider a combinatorial auction with three items {a,b,c} and three players (I, II, III. The valuations each player has for each subset of a b с ab bс ас abc I 1 2 1 6 4 11 II 3 5 3 3 5 III| 4 5 0 7 5 7 the items is shown below. What is the allocation produced under the VCG (Vickrey-Clarke-Groves) mechanism and what are the VCG payments of the players?Problem 1: Exchange economy Consider an exchange economy with two consumers, A and B, and two goods, X and Y. Consumer A has an initial endowment TA = i >0 of good X, an initial endowment yA = 0 of good Y, and preferences over consumption bundles that can be represented by the Cobb-Douglas utility function uA(TA: YA) = ", where ra is the quantity of good X, yYA is the quantity of good Y, and a € (0, 1) is a preference parameter. Consumer B has an initial endowment ig = 0 of good X, an initial endow- ment js = j > 0 of good Y, and preferences over consumption bundles that can be represented by the Cobb-Douglas utility function up(rB, YB): B1-3 where rB is the quantity of good X, YB is the quantity of good Y, and BE (0, 1) is a preference parameter. (a) Find the set of Pareto optimal allocations in this economy. In appro- priate diagrams, illustrate the set of Pareto optimal allocations when (i) 3 = a, (ii) 3 > a, and (iii) 3 a.Consider a two-good exchange economy with two types of consumers. Type A have the utility function And an endowment of 3 units of good 1 and k units of good 2. Type B has the utility function And an endowment of 6 units of good 1 and 21 - k units of good 2. a. Find the competitive equilibrium outcome and show that the equilibrium price p* = p1/p2 of good 1 in terms of good 2 is p* = 21+k/15. b. Find the income levels (MA; MB) of both types in equilibrium as a function of k. c. Suppose that the government can make a lump-sum transfer of good 2, but it is impossible to transfer good 1. Use your answer to part b to describe the set of income distributions attainable through such transfers. Draw this in a diagram. d. Suppose that the government can affect the initial distribution of resources by varying k. Find the optimal distribution of income if (i) the SWF is W = log(MA) + log(MB) and (ii) W = MA + MB.