Question

please don't copy answers from other post, that's incorrect. thank you.

Garfield and Odie both like to consume Lasagna L and Popcorn P function U L2P, so that the demands for the two goods are L-21/3 and P I/(3p), where p is the relative price of popcorn and I is income. (a) Initially Garfield has 4 units of Lasagna and 10 units of Popcorn, while Odie has 2 and 8 . They each have the utility respectively. What are their initial indifference curves? What are their slopes? (b) For these initial quantities, what would be the relative price of popcorn if they traded compet- itively? The initial endowment is gone. Garfield has 8 hours of time and can produce one Lasagna or 3 units of popcorn in an hour. Odie has 8 hours of time and can produce one Lasagna in 3 hours or 2 units of popcorn in one hour. They trade competitively (c) Who has the absolute advantage in producing Lasagna? Who has the comparative advantage? (d) Show the range of prices for popcorn so that both would produce Lasagna, that one produces

Answer 1

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