Suppose that Hoda's utility function is UH=T+3C and that Kathie Lee's utility function is UE=3T+C, where...
Suppose that Hoda's utility function is UH=T+3C and that Kathie Lee's utility function is UE=3T+C, where T is pounds of tea per year and C is pounds of coffee per year. Suppose there are fixed amounts of 30 pounds of coffee per year and 20 pounds of tea per year. Suppose also that the initial allocation is 20 pounds of coffee to Hoda (leaving 10 pounds to Kathie Lee) and 10 pounds of tea to Hoda (leaving 10 pounds of tea to Kathie Lee). a. What do the utility functions say about the marginal rates of substitution of coffee for tea? b. Draw the Edgeworth Box showing indifference curves and the initial allocation. c. Draw the contract curve on the Edgeworth Box. Explain why it looks different from the contract curves depicted in the text. d. Is the initial allocation of coffee and tea Pareto efficient?
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Suppose that Hoda's utility function is UH=T+3C and that Kathie
Lee's utility function is UE=3T+C, where...
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...
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 =...
Humphrey and Lauren must split 10 pounds of food and 10 gallons of water. Suppose we...
Humphrey and Lauren must split 10 pounds of food and 10 gallons of water. Suppose we can represent Humphrey‘s preferences with the utility function UH = F 2 HWH, and Lauren‘s preferences with the utility function UL = min{FL,WL}. Initial endowments are such that w(FH,WH) = (2,5) and w(FL,W) = (8,5) (a) Draw the Edgeworth box for this exchange economy (with Humphrey on the lower vertex), including the initial endowment point and some indifference curves for each. (b) What is...
Suppose individuals A and B start with endowments (3,7) and (7,3),respectively. *Please answer all parts of...
Suppose individuals A and B start with endowments (3,7) and (7,3),respectively. *Please answer all parts of the question including #5,6,7,8,9,10,11* Draw the Edgeworth box and label the initial endowments. Are the final allocations (6, 3) and (5, 6) feasible? Suppose that individual A has utility function UA = xA1 + 2xA2 . Draw a few of A’s indifference curves on the Edgeworth box. (Make sure you’ve drawn them correctly.) Suppose that individual B has utility function UB = 2xB1 +...
Anne and Bill are left stranded on a desert island with nothing else but some water...
Anne and Bill are left stranded on a desert island with nothing else but some water x and bread y. There are 100 units available of each good. Suppose that initially Anne has all the water and Bill has all the bread. Anne and Bill have different preferences over the consumption of water and bread. Anne’s utility function is ??(?,?)=? raised 2/5 ? raised3/5, and Bill’s utility function is ??(?,?)=? raised 1/4 ? raised3/4. [30 marks] a) [3 marks] Is...
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 =...
3. Suppose there are two consumers, A and B. The utility functions of each consumer are...
3. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: Up(X,Y) = X + 2Y The initial endowments are: A:X=2; Y = 8 a) Using an Edgeworth Box, graph the initial allocation (label it "W") and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and accurately. b) What is the marginal rate of substitution for consumer A at the initial...
II. Ms. Caffeine enjoys coffee (C) and tea (T) according to the function U(C, T) =...
II. Ms. Caffeine enjoys coffee (C) and tea (T) according to the function U(C, T) = 3C + 4T. a. What does her utility function say about her MRS of coffee for tea? What do her indifference curves look like? b. If coffee and tea cost $3 each and Ms. Caffeine has $12 to spend on these products, how much coffee and tea should she buy to maximize her utility? c. Draw the graph of her indifference curve map and...
Example Consider a society with 2 individuals A and B and 2 goods 1 and 2....
Example Consider a society with 2 individuals A and B and 2 goods 1 and 2. The total available amount of good 1 and 2 is 9 units and 12 units. The utility function for the consumers is given by U(x)=(x,1)(x) for i=A,B. a) Show this economy in an Edgeworth box, including indifference curves. b) Define the meaning of the following notions; Pareto- efficient allocation, Pareto set, and contract curve. c) Find and draw the contract curve for this economy....
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...
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 =...
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...
3. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: Up(X,Y) = X + 2Y The initial endowments are: A:X=2; Y = 8 a) Using an Edgeworth Box, graph the initial allocation (label it "W") and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and accurately. b) What is the marginal rate of substitution for consumer A at the initial...
Example Consider a society with 2 individuals A and B and 2 goods 1 and 2. The total available amount of good 1 and 2 is 9 units and 12 units. The utility function for the consumers is given by U(x)=(x,1)(x) for i=A,B. a) Show this economy in an Edgeworth box, including indifference curves. b) Define the meaning of the following notions; Pareto- efficient allocation, Pareto set, and contract curve. c) Find and draw the contract curve for this economy....
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