Homework Answers
A) indicate possible gains from trade - is correct
Efficiency is achieved at tangency of indifference curve. When two indifference curves intersects it means utility can be increased.
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In an Edgeworth Box, intersections between indifference curves: O A) indicate possible gains from trade. O...
2. (20) Consider an Edgeworth box economy where the preferences and endow- ments are u" (1,...
2. (20) Consider an Edgeworth box economy where the preferences and endow- ments are u" (1, 3) = In:} +2 in x and e' = (0,6) w?(21,2)= x + (23) and e? = (10,4). (a) [4] State the definition of a Pareto optimal allocation. (b) [6] Find all the interior Pareto optimal allocations, using ah, as the pa rameter (that is, express the PO allocations in terms of 2). In this part, you are not required to find the range...
b. (5pts) Edgeworth Box: Suppose Adam and Bob are stuck on an island. The island has only two resources: coconuts and pineapples. Suppose that there are only 30 coconuts and 40 pineapples on the isla...
b. (5pts) Edgeworth Box: Suppose Adam and Bob are stuck on an island. The island has only two resources: coconuts and pineapples. Suppose that there are only 30 coconuts and 40 pineapples on the island. Suppose they initially split the coconuts and pineapples equally between each other. However, Adam prefers pineapples over coconuts and is willing to exchange 10 of his coconuts for 2 pineapples. Such a trade will increase his utility from 60 to 80 utils. Bob likes coconuts...
C1 [19 marks] Suppose Malcolm and Barnaby are the only two people in a pure exchange...
C1 [19 marks] Suppose Malcolm and Barnaby are the only two people in a pure exchange economy. Food and clothing are the only two commodities. Malcolm is endowed with 30 units of food and 10 units of clothing, while Barnaby is endowed with 10 units of food and 30 units of clothing. Let F = units of food and C = units of clothing. Malcolm’s utility function is UM = 2 min(F, C) and Barnaby’s utility function is UB =...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is UA = Z CA and Deepa' s utility function is U = 29.5C9.5. Adrienne's marginal utility of pizza is MUZ = CA, and her marginal utility of cola is MUS = Z . Similarly, Deepa' s marginal utility of pizza is MU} = -2;0.500.5 and her marginal utility of cola is MUS = -2,5050.5. Their initial holdings of pizza and cola are ZA =...
Description of the economy: For each of the following problems, consider a 2x2 Exchange Economy with two consumers A and B, and two goods X and Y . The preferences of consumer A can be represented by...
Description of the economy: For each of the following problems, consider a 2x2 Exchange Economy with two consumers A and B, and two goods X and Y . The preferences of consumer A can be represented by the utility function uA(xA, yA) = xAyA , where xA is the amount of good A consumed by consumer A, and yA is the amount of good Y consumed by consumer A. The preferences of consumer B can be represented by the utility...
1. Consider the following exchange economy. There are two goods (1 and 2) and two consumers (A an...
1. Consider the following exchange economy. There are two goods (1 and 2) and two consumers (A and B). Preferences and endowments are as follows: uA (イ·攻)-玲攻 TA _ (0,2) 2(4,0) (a) Draw an Edgeworth Box diagram to depict this economy. Your diagram should be clearly labelled, and should include the autar kic allocation as well as a couple of indifference curves for each consumer. (Indifference curves for A do not need to be precisely accurate but those for B...
In the Edgeworth box diagram for production 7 a. a point off the "contract curve" (or "production efficiency locus"...
In the Edgeworth box diagram for production 7 a. a point off the "contract curve" (or "production efficiency locus") cannot have more production of one of the goods than can some point on the curve. b. a point off the "contract curve" (or "production efficiency locus") can involve more production of both goods than can any point on the curve. c. a movement from autarky to trade can be associated with a movement along the "contract curve" (or "production efficiency...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is UA = ZĄCA and Deepa' s utility function is U = 295c9S. Adrienne' s marginal utility of pizza is MUZ = CA, and her marginal utility of cola is MUS = ZA. Similarly, Deepa' s marginal utility of pizza is MU] =2,05095 and her marginal utility of cola is MUY =2,5c, 0.5. Their initial holdings of pizza and cola are 2A = 10, CA...
11. Suppose that, in the context of the Edgeworth box diagram in production, there are constant returns to scale in...
11. Suppose that, in the context of the Edgeworth box diagram in production, there are constant returns to scale in each of the two industries and that one good is relatively labor-intensive in its production process and the other good is relatively capital-intensive in its production process. In considering this Edgeworth box diagram and the PPF that can be derived from it, a. all points on the diagonal" of the Edgeworth box diagram will have corresponding points on the PPF....
Description of the economy: For each of the following problems, consider a 2x2 Exchange Economy with two consumers A and B, and two goods X and Y . The preferences of consumer A can be represented by...
Description of the economy: For each of the following problems, consider a 2x2 Exchange Economy with two consumers A and B, and two goods X and Y . The preferences of consumer A can be represented by the utility function uA(xA, yA) = xAyA , where xA is the amount of good A consumed by consumer A, and yA is the amount of good Y consumed by consumer A. The preferences of consumer B can be represented by the utility...
2. (20) Consider an Edgeworth box economy where the preferences and endow- ments are u" (1, 3) = In:} +2 in x and e' = (0,6) w?(21,2)= x + (23) and e? = (10,4). (a) [4] State the definition of a Pareto optimal allocation. (b) [6] Find all the interior Pareto optimal allocations, using ah, as the pa rameter (that is, express the PO allocations in terms of 2). In this part, you are not required to find the range...
b. (5pts) Edgeworth Box: Suppose Adam and Bob are stuck on an island. The island has only two resources: coconuts and pineapples. Suppose that there are only 30 coconuts and 40 pineapples on the island. Suppose they initially split the coconuts and pineapples equally between each other. However, Adam prefers pineapples over coconuts and is willing to exchange 10 of his coconuts for 2 pineapples. Such a trade will increase his utility from 60 to 80 utils. Bob likes coconuts...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is UA = Z CA and Deepa' s utility function is U = 29.5C9.5. Adrienne's marginal utility of pizza is MUZ = CA, and her marginal utility of cola is MUS = Z . Similarly, Deepa' s marginal utility of pizza is MU} = -2;0.500.5 and her marginal utility of cola is MUS = -2,5050.5. Their initial holdings of pizza and cola are ZA =...
1. Consider the following exchange economy. There are two goods (1 and 2) and two consumers (A and B). Preferences and endowments are as follows: uA (イ·攻)-玲攻 TA _ (0,2) 2(4,0) (a) Draw an Edgeworth Box diagram to depict this economy. Your diagram should be clearly labelled, and should include the autar kic allocation as well as a couple of indifference curves for each consumer. (Indifference curves for A do not need to be precisely accurate but those for B...
In the Edgeworth box diagram for production 7 a. a point off the "contract curve" (or "production efficiency locus") cannot have more production of one of the goods than can some point on the curve. b. a point off the "contract curve" (or "production efficiency locus") can involve more production of both goods than can any point on the curve. c. a movement from autarky to trade can be associated with a movement along the "contract curve" (or "production efficiency...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is UA = ZĄCA and Deepa' s utility function is U = 295c9S. Adrienne' s marginal utility of pizza is MUZ = CA, and her marginal utility of cola is MUS = ZA. Similarly, Deepa' s marginal utility of pizza is MU] =2,05095 and her marginal utility of cola is MUY =2,5c, 0.5. Their initial holdings of pizza and cola are 2A = 10, CA...
11. Suppose that, in the context of the Edgeworth box diagram in production, there are constant returns to scale in each of the two industries and that one good is relatively labor-intensive in its production process and the other good is relatively capital-intensive in its production process. In considering this Edgeworth box diagram and the PPF that can be derived from it, a. all points on the diagonal" of the Edgeworth box diagram will have corresponding points on the PPF....
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