Microeconomics
2nd Edition
ISBN: 9781259813337
Author: KARLAN, Dean S., Morduch, Jonathan
Publisher: Mcgraw-hill Education,
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Question
Chapter 2, Problem 16PA
To determine
Terms of trade for 1 pound of tomato.
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Ken and Daniel always eat miso soup and sushi in exact proportions: Ken eats one miso per two sushi; Daniel eats two miso per one sushi. They throw away any extra soup or sushi as it would not give them any pleasure. Once, they were stuck in the office together for hours, marking students’ assignments. Ken had ten miso soups and two sushi with him; Daniel had two miso and ten sushi.
(For the purpose of this question, assume that miso and sushi can be divided into little pieces so one-half miso or one-hundredth of sushi makes sense)
a) Draw the Edgeworth box for Ken and Daniel. Please put Ken at the origin and Daniel“upside down”; put miso on the horizontal axis and sushi on the vertical one. Show their endowment point
Imagine a very small economy in which there are only four people and only one product. William is willing to pay $10 for one of the
product, $8 for a second, $6 for a third, $4 for a fourth, and $1 for every one after that until he has a total of twenty. James is willing to
pay $3 for every item up to 10, then he cannot buy any more because he has only $30. Adriana is willing to pay $2 for each of the first
three of the item, then $1 for a fourth, but no more. Gerardo is willing to pay $8 for one of the product, $3 for a second, and $1 for a
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How many of this product will be sold if the price is $17 What if the price is $3?
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OB. 37, 16
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OD 40, 20
Suppose there are two individuals, Casey and Rick, who live in a very simplified world where only two goods are produced and consumed; rice and beans. The production opportunity cost for Casey is 4.00kg of rice for every kilogram of beans. Rick has a production opportunity cost of 2.00 kg of rice for every kilogram of beans. Casey eventually realizes that, through trade, both individuals can be better off. Rick is willing to trade. What price can be settled between these two parties such that both individuals can enjoy more rice and beans?
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