Homework Answers
11) c. the PPF will show increasing opportunity costs.
12) d. the marginal rate of substitution (MRS) of the consumer between the two goods.
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11. Suppose that, in the context of the Edgeworth box diagram in production, there are constant returns to scale in...
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...
Consider a pure exchange economy two consumers, Rachel and Lauren, and two commodities, watermelon and tomatoes....
Consider a pure exchange economy two consumers, Rachel and Lauren, and two commodities, watermelon and tomatoes. Rachel’s initial endowment is 4 units of watermelon and 3 units of tomatoes. Lauren’s initial endowment is 2 units of watermelon and 5 units of tomatoes. Rachel and Lauren have identical utility functions: Rachel’s utility is UR(WR,TR) = WRTR where WR and TR is Rachel’s quantity of watermelon and quantity of tomatoes, respectively; similarly, Lauren’s utility is UL(WL,TL) = WLTL where WL and TL...
1. True or False, and explain briefly. 1) The assumption that more is better implies that...
1. True or False, and explain briefly. 1) The assumption that more is better implies that the indifference curves are upward sloping 2) Convexity of indifference curves implies that consumers are willing to give up more to get an extra the more they have 3) Consider the following three bundles. Bundle Good Goody If Bundles A and B are on the same indifference curve, preferences satisfy all the usual assumptions introduced in the lecture, Bundle Cis preferred to Bundle A...
Imagine a representative consumer, whose utility for apples (X) and all other goods (Y) can be...
Imagine a representative consumer, whose utility for apples (X) and all other goods (Y) can be represented in a Cobb-Douglas form. 1. Please graphically represent consumer indifference curves, given prices Px and Py and the budget constraint M. 2. What will happen to consumer utility and optimal bundle if consumer income (budget) increases and apples are a necessity good? Please show graphically and explain the intuition. 3. What will happen to consumer utility and optimal bundle if apple price decreases...
Hi there, I need help on Questions 11 and 12 Utility Surface: TU TUX + TU.Y...
Hi there, I need help on Questions 11 and 12
Utility Surface: TU TUX + TU.Y 6.5 21.5 13.5 13 12 10 21 21.5 18 Y 2 Y_1 Y.0 15 18 12 15 15.5 X 1 1. Draw two indifference curves and identify the respective levels of utility. 2. Arrive at the marginal utility stracture of good X and good Y (use table below) Units of good MU-X: IS-12 6-5 MULY 1 3. Identify consumer equilibrium in general @ algebraically...
can someone explain this step by step? especially don't understand how they got m/px? why we...
can someone explain this step
by step? especially don't understand how they got m/px? why we
can't use the lagrange. and not sure how they drew the graph for
this question. SOMEONE PLEASE HELP MIDTERM SOON AND WILL GIVE BIG
THUMBS UP!!!! confused where 4x20+5x0 is coming from
Problem 4 Eric's preferences for goods x and y are represented by the following utility function: U(X,Y) = 4X +5Y. The price of good X is px = 2 and the price...
Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are...
Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are MU(X) = 2x7"! and MU2:) = 1. Throughout this problem, assume P2 = 1. (a) Sketch an indifference curve for these preferences (label axes and intercepts). (b) Compute the marginal rate of substitution. (c) Assume w> . Find the optimal bundle (this will be a function of pı and w). Why do we need the assumption w> (d) Sketch the demand function for good...
co Jane has 11 liters of soft drinks and 8 sandwiches. Bob, on the other hand,...
co Jane has 11 liters of soft drinks and 8 sandwiches. Bob, on the other hand, has 9 liters of soft drinks and 12 sandwiches. With these endowments, Jane's marginal rate of substitution (MRS) of soft drinks for sandwiches is 4 and Bob's MRS is equal to 2. Draw an Edgeworth box diagram to show whether this allocation of resources is efficient. If it is explain why. If it is not, what changes will make both parties better off? ....
2. Suppose that a person produces their own consumption good, G, using a production function G=3L,...
2. Suppose that a person produces their own consumption good, G, using a production function G=3L, where L is the amount of labour time used. The person has 24 units of labor time available to them. Free time, denoted F, is the amount of time not used for labour. a. Compute the average product of labour and show that it is constant. b. Draw the set of feasible combinations of G and F, with F on the horizontal axis. c....
1-Home produces 2 goods X and Y . Home country has two factors of production, Labor...
1-Home produces 2 goods X and Y . Home country has two factors of production, Labor and Capital. All consumers at Home have preferences over two goods that can be represented by the utility function U(X,) =XY . The factor requirements per unit of output of the two goods are also fixed and they are shown in the following table: Good X Good Y Labour 1/3 2/3 Capital 2/3 1/3 Home country has 360 units of Labour and 600 units...
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. True or False, and explain briefly. 1) The assumption that more is better implies that the indifference curves are upward sloping 2) Convexity of indifference curves implies that consumers are willing to give up more to get an extra the more they have 3) Consider the following three bundles. Bundle Good Goody If Bundles A and B are on the same indifference curve, preferences satisfy all the usual assumptions introduced in the lecture, Bundle Cis preferred to Bundle A...
Hi there, I need help on Questions 11 and 12
Utility Surface: TU TUX + TU.Y 6.5 21.5 13.5 13 12 10 21 21.5 18 Y 2 Y_1 Y.0 15 18 12 15 15.5 X 1 1. Draw two indifference curves and identify the respective levels of utility. 2. Arrive at the marginal utility stracture of good X and good Y (use table below) Units of good MU-X: IS-12 6-5 MULY 1 3. Identify consumer equilibrium in general @ algebraically...
can someone explain this step
by step? especially don't understand how they got m/px? why we
can't use the lagrange. and not sure how they drew the graph for
this question. SOMEONE PLEASE HELP MIDTERM SOON AND WILL GIVE BIG
THUMBS UP!!!! confused where 4x20+5x0 is coming from
Problem 4 Eric's preferences for goods x and y are represented by the following utility function: U(X,Y) = 4X +5Y. The price of good X is px = 2 and the price...
Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are MU(X) = 2x7"! and MU2:) = 1. Throughout this problem, assume P2 = 1. (a) Sketch an indifference curve for these preferences (label axes and intercepts). (b) Compute the marginal rate of substitution. (c) Assume w> . Find the optimal bundle (this will be a function of pı and w). Why do we need the assumption w> (d) Sketch the demand function for good...
co Jane has 11 liters of soft drinks and 8 sandwiches. Bob, on the other hand, has 9 liters of soft drinks and 12 sandwiches. With these endowments, Jane's marginal rate of substitution (MRS) of soft drinks for sandwiches is 4 and Bob's MRS is equal to 2. Draw an Edgeworth box diagram to show whether this allocation of resources is efficient. If it is explain why. If it is not, what changes will make both parties better off? ....
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