Homework Answers
Ans. a) A Rawlsian Government would choose C, while a Utilitarian government would choose A. Since Albert and Deborah are better off under C than, the Rawlsian government would win the election.
Rawlsian government looks at social justice without considering who would be benefitted due to the action.
Utilitarian government tries to give maximum utility to the individuals who can afford to get the most.
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Table 1 ALBERT CLARA DEBORAH 24 100 20 40 40 40 30 30 30 Suppose there...
2. Suppose there is only one consumption good, while there are two individuals. Agent 1 has...
2. Suppose there is only one consumption good, while there are two individuals. Agent 1 has utility function u1-9q1, while agent 2 has utility function u2 can choose any non-negative values of q1 and q2 such that: q2. The policymaker 1 q2 10 (a) What choice of values of q1 and q2 maximize a utilitarian social welfare function (SWF), subject to the above constraint? (b) What choice of values of q1 and q2 maximizes the Rawlsian SWF?
2. A society has two individuals, 1 and 2, and is considering three policy proposals, A,...
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30 25 20 Pwfl+t) 15 Pw 10 0 10 20 30 40 50 60 70 80 90 100 Q -jets Suppose the world market price of jets is P 10 but that economic policy initia What is the closed economy market equilibrium price and quantity of of jets? P all jet If imports are allowed at Pr = 10 , how many jets would be imported? o and domestic produced supply indicate domestic demand on the horizontal axis on the...
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PE 56 24 Refer to the diagram below. Suppose that the U.S. imposes a $1/unit tariff on all imported hammers. What would be the amount of government revenue and the total amount of deadweight loss due to the tariff (as opposed to free trade at $5/unit)? Price Domestic Supply $13 / LEX $1.00 Tariff World Price 1 No co Domestic Demand 30 40 60 84 96 Quantity $1.00 Tarift No00 World Price Domestic Demand 30 40 60 84 96 Quantity...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and...
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1. Prof. Ronald Coase's seminal 1960 paper asks us to imagine the following scenario. A farmer...
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Suppose the government wants to reduce the total pollution emitted by three firms in its area
Suppose the government wants to reduce the total pollution emitted by three firms in its area. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. The government wants to reduce total pollution in the area to 6 units. In order to do so the government can choose between two methods: Under method 1, the governments sets pollution standards, whereas under method 2, the government allocated tradable pollution permits, Let’s compare...
Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is...
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2. Suppose there is only one consumption good, while there are two individuals. Agent 1 has utility function u1-9q1, while agent 2 has utility function u2 can choose any non-negative values of q1 and q2 such that: q2. The policymaker 1 q2 10 (a) What choice of values of q1 and q2 maximize a utilitarian social welfare function (SWF), subject to the above constraint? (b) What choice of values of q1 and q2 maximizes the Rawlsian SWF?
2. A society has two individuals, 1 and 2, and is considering three policy proposals, A, B, and C. It is known that the two individuals rank the three policies as follows: Individual 1: A the best, B the 2n best, and C the worst Individual 2: C the best, A the 2n best, and B the worst. e. From the ranking information given above, for each individual, assign a set of utility numbers to represent the given preference relation....
30 25 20 Pwfl+t) 15 Pw 10 0 10 20 30 40 50 60 70 80 90 100 Q -jets Suppose the world market price of jets is P 10 but that economic policy initia What is the closed economy market equilibrium price and quantity of of jets? P all jet If imports are allowed at Pr = 10 , how many jets would be imported? o and domestic produced supply indicate domestic demand on the horizontal axis on the...
PE 56 24 Refer to the diagram below. Suppose that the U.S. imposes a $1/unit tariff on all imported hammers. What would be the amount of government revenue and the total amount of deadweight loss due to the tariff (as opposed to free trade at $5/unit)? Price Domestic Supply $13 / LEX $1.00 Tariff World Price 1 No co Domestic Demand 30 40 60 84 96 Quantity $1.00 Tarift No00 World Price Domestic Demand 30 40 60 84 96 Quantity...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and average cost) is constant at 20. a. What single price will maximize a monopolist's profit? b. What will be the prices and quantity under two-part pricing? It involves a lump sum fee (e.g., membership fee) equal to the consumer surplus at competitive prices and user fees (i.e., unit price) equal to the competitive price. c. Now the monopolist has another group of consumers whose...
Suppose a consumer has income of $100 that she can spend on doctors' visits, which cost $20 each or "other goods," which we will represent with a composite good whose price is $1 per unit (i.e,the numeraire). (a) Illustrate her budget constraint The government is considering offering one of the following three health plans to con- sumers. Plan A will simply give everyone an additional $40 of income (perhaps through a tax cut). Under plan B, the government will give...
1. Prof. Ronald Coase's seminal 1960 paper asks us to imagine the following scenario. A farmer and a cattle rancher are operating on neighboring properties. Inevitably, some of the rancher's cattle manage to stray onto the farmer's plot, damaging the crops and rendering them worthless. Now, consider the following numerical example: Suppose the cost to build a fence between the two properties that is strong enough to keep the cattle penned in is $10,000. The cattle rancher earns a profit...
Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation 2. The government allocates tradable pollution permits. Each firm faces different costs,...
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