In an Edgeworth box, illustrate that a Pareto-efficient equilibrium, point a, can be obtained by competition, given an appropriate endowment. Do so by identifying an initial endowment point, b, located somewhere other than at point a, such that the competitive equilibrium (resulting from competitive exchange) is a. Explain.
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- True/False For each of the following, you MUST indicate whether the statement is TRUE or FALSE and you MUST explain why. 1. 2. 3. 4. 5. A Nash Equilibrium is always Pareto Efficient. When there is production, a Competitive Equilibrium is not always Pareto Efficient due to possible increasing returns to scale. A Prisoner's Dilemma must involve prisoners. This is what makes the model interesting. A Pigouvian Tax to correct for the inefficiencies caused by a negative externality should be corrected by placing the tax between the Private Demand and the Social Demand at the intersection of Supply and Private Demand. To find the Social Welfare Function, simply add up the individual utility functions of each member of society.Question 8.A Frank the armadillo and Claire the ant eater consume ants (z) and termites (y). Frank has 30 ants and 10 termites, while Claire has 10 ants and 30 termites. Frank's utility function is: While Claire's utility function is: 2/3 1/3 Up (IF, YF) = IF Up Uc (Icyc) = 1/3,2/3 Find a competitive equilibrium for this economy.A competitive equilibrium is Pareto efficient because at the competitive equilibrium,A) prices have been allowed to adjust.B) there are no further gains from trade.C) the final outcome is different from the original inefficient endowment.D) all members of society can be made better off.
- The correct solutions are posted with the questions. Please show work for the answers listed Frankie and Johnny own competing motorcycle shops. They face a demand curve P = 200 – 3Q, where Q is the total number of motorcycles produced by both Frankie and Johnny. Each shop faces a marginal cost of production of 20. A) If Frankie and Johnny must decide their production levels at the same time, what is the Nash equilibrium level of production for each shop? Answer: q*= 20 B) Suppose Frankie gets to make his production decision first. What is the Nash equilibrium level of production for each firm? Answer: Frankie: 30 and Johnny:15 C) How much would Johnny be willing to pay to keep Frankie from making his decision first? Answer: $525In what sense is a competitive equilibrium a good or bad thing for a given economy?Dear tutor, please solve these True/False Questions. Thank You! Can it be efficient for one trader to consume all units of the goods while the other trader consumes nothing? In other words, does this point lie on the contract curve? A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.
- When the cost of production decreases and all other factors remain the same, then if we have a market equilibrium the price of Equilibrium will decrease and the quantity of equilibrium will increase. Select one: True FalseWalmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. *Assume Walmart has built a Large full-service supermarket there (i.e.Walmartchooses to build a large full-service supermarketL1at the first stage). Calculate HEB’s profit for the following cases: a.) HEB chooses not to enter N′′ at the second stage after viewing Walmart’s…Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. Assume Walmart stays out of the potential market (i.e.Walmart chooses not to enterN1at the first stage,q1= 0). Calculate HEB’s profit for the following cases: a.) HEB chooses not to enter N at the second stage after viewing Walmart’schoice. b.) HEB chooses to build a small…
- Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. Assume Walmart stays out of the potential market (i.e.Walmart chooses not to enterN1at the first stage,q1= 0). Calculate Walmart's profit for the following cases: a.) HEB chooses not to enter N at the second stage after viewing Walmart’s choice. b.) HEB chooses to build a small…Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. *Assume Walmart has built a Large full-service supermarket (i.e.Walmart chooses to build a large full-service supermarket L1 at the first stage). Calculate Walmart's profit for the following cases: a.) HEB chooses not to enter N at the second stage after viewing Walmart’s…Show that when all consumers and producers are price takers, a competitive equilibrium is always Pareto optimal.