John has 6 cookies and 3 protein bars, while Luke has 3 cookies and 6 protein...
John has 6 cookies and 3 protein bars, while Luke has 3 cookies and 6 protein bars. Although they like the same products, they have different preferences over them; John’s utility function is ?(?,?)= ??2 and Luke’s utility function is ?(?,?)=?2? . The two decide to engage in trade.
a. Without normalizing prices, find their demand functions for each good.
b. Write the excess demand function for cookies.
c. Normalizing the price of protein bars, find the equilibrium price of cookies (??∗) that clears the two markets. How many cookies and protein bars does each of them consume in the competitive equilibrium?
d. Are they each better off after engaging in trade than they would have been consuming their endowments? Show your calculations.
Homework Answers
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John has 6 cookies and 3 protein bars, while Luke has 3 cookies
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Angie has 12 cookies ana a marginal value curve described by P=45-3Qa,while Benny has 0 cookies...
Angie has 12 cookies ana a marginal value curve described by P=45-3Qa,while Benny has 0 cookies and a marginal value curve described by P=44-2Qb. Assume Angie and Benny are the only two people in the cookie market . a) Write down the market demand function and market supply function and draw the market demand and supply curves in one graph . b) Solve for the market equilibrium price and quantity. c) How many cookies does each of them consume ?...
Angie has 12 cookies ana a marginal value curve described by P=45-3Qa, while Benny has 0...
Angie has 12 cookies ana a marginal value curve described by P=45-3Qa, while Benny has 0 cookies and a marginal value curve described by P-44-2Qb. Assume Angie and Benny are the only two people in the cookie market. a) Write down the market demand function and market supply function and draw the market demand and supply curves in one graph. b) Solve for the market equilibrium price and quantity. c) How many cookies does each of them consume ? d)...
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Angie has 12 cookies, and a marginal value curve described by P = 45 - 3Qa,...
Angie has 12 cookies, and a marginal value curve described by P
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curve described by P = 44 - 2Qb.
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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...
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Angie has 12 cookies ana a marginal value curve described by P=45-3Qa, while Benny has 0 cookies and a marginal value curve described by P-44-2Qb. Assume Angie and Benny are the only two people in the cookie market. a) Write down the market demand function and market supply function and draw the market demand and supply curves in one graph. b) Solve for the market equilibrium price and quantity. c) How many cookies does each of them consume ? d)...
Angie has 12 cookies, and a marginal value curve described by P
= 45 - 3Qa, while Benny has zero cookies, and a marginal value
curve described by P = 44 - 2Qb.
Important!!)) I don't know how to get
consumer surplus and seller surplus when kink exists.
e.g)
2. Refer to the equations of Question 1. Assume Angie and Benny are the only two people in the cookie market. a) Write down the market demand function(s) and market supply...
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Please help me with my homework, thanks!
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