this is the entire question this is all the information given 2. Consider a pure exchange...
Anything will help Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con- sumers, A and B. Let cheese be the numeraire good with price of $1. Consumer A's utility function is UA(x, y) = xy and B's utility function is UB(x, y) = min [x, y). A has an initial allocation of 10 x and no y, and B has an initial allocation of 10 units of y and no x. (a) Put...
Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con- sumers, A and B. Let cheese be the numeraire good with price of $1. Consumer A's utility function is UA(x; y) = 2x+y and B's utility function is UB(x; y) = xy. A's initial allocation is 10 units of x and 0 units of y. B's initial allocation is 0 units of x and 30 units of y. (a) Put wine x on the...
(a) Put wine x on the horizontal axis and cheese y on the vertical axis. Measure goods for consumer A from the lower left and goods for consumer B from the upper right. Mark the initial allocation with the letter W. Draw the indifference curves for each person through this point. Calculate utility at this allocation for both consumers. Is the initial resource allocation consistent with Pareto efficiency? Explain. (b) Solve for the contract curve of Pareto efficient allocations in...
Pure Exchange Model 1. Consider a Pure Exchange Economy with two agents A and B and two goods X and Y in which each agent acts competitively. Their preferences are given by the following utility function U(X,Y)=X13*Y23 Their initial endowments are as follows W=(5,20) w- (25,10) a) Calculate the demand functions for Good X and Good Y for each agent. b) State the equilibrium conditions for this economy. c) Using these conditions and the demand functions found in part a)...
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....
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. 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...
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...
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...
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 =...