Homework Answers
If the social welfare function is type of Utilitarian, then the goal of social planner is to maximize the sum of utility of individual people.
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2. Consider an economy with three individuals who are identical except for their income: individual 1...
I consider an economy with two individuals (1 and 2). A, B, and C are three...
I consider an economy with two individuals (1 and 2). A, B, and C are three points that belong to the utility possibility frontier of the economy. The individual utilities (Ul. U2) at the three points are as follows: Pointsul U2 A 4 21 B 8 17 C 14 6 Now consider point D. Pointul U2 D 9 15 a. Does point D lie on the utility possibility frontier? How does the answer change if you know the utility possibility...
2) Consider an Exchange economy composed of two individuals A and B and two goodsx1 and...
2) Consider an Exchange economy composed of two individuals A and B and two goodsx1 and x2. Individual A has an endowment of W(3,5) and individual B has an endowment of Wa^- (3,3). A's utility function is given byUA Xx2. Suppose that B is neutral about x1 (neither increasing nor decreasing the amount of x1 affects her utility) and she prefers more of x2 to less. Specifv a utility function for B. Eind the equilibrium price and allocations. 3) Consider...
4) (8 points) Consider an exchange economy composed of two individuals A and B and two...
4) (8 points) Consider an exchange economy composed of two individuals A and B and two goods xi and x2. Individual A has an endowment of wA2,4) and individual B has an endowment ofw (3,3). A's utility function is given bỵU,-x1 X2. Individual B's utility, function is giyen bỵ UB-X1 X22. Eind the equilibrium price and allocation.
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?
5. Imagine there is an economy with pure exchange with two individuals (1 and 2). A,...
5. Imagine there is an economy with pure exchange with two
individuals (1 and 2). A, B and C are three points that belong to
the utility possibility frontier (UPF) of the two individuals.
a) According to the information of the previous table, is the
following statement true or false: "The point D (2,5) belong to the
UPF"
b) Please explain why it is true or false.
c) If the Social Welfare Function (SWF) of this economy is W=
U1+...
4. What is the optimal income distribution between two citizens under these three assumptions: -The Social...
4. What is the optimal income distribution between two citizens under these three assumptions: -The Social Welfare Function is Utilitarian. - The total income is fixed. - The two citizens have the same individual utility function, which exhibits decreasing but positive marginal utility of income. What are the implications of this result and why we do not see policies to enforce this degree of income distribution in the real world? Justify your answer mentioning one or more of the three...
5. Imagine there is an economy with pure exchange with two individuals (1 and 2). A,...
5. Imagine there is an economy with pure exchange with two individuals (1 and 2). A, B and C are three points that belong to the utility possibility frontier (UPF) of the two individuals. Points U1 U2 A 2 7 B 5 5 C 7 2 According to the information of the previous table, is the following statement true or false: "The point D (2,5) belong to the UPF" Question: True or False A. true B False Explain your answer...
2. Consider two citizens, Bill and Ted, who live in the fictional country of "Econoland". Bill...
2. Consider two citizens, Bill and Ted, who live in the fictional country of "Econoland". Bill works as a lawyer and eams $50 per hour. Ted works at Meijer and earns $6 per hour. Both Bill and Ted have identical utility functions equal tou=y"(which is the same as U=JT)where yìs take-home pay (which also equals consumption, if neither Bill nor Ted save). The govemment of Econoland is concemed about i President of Econoland wants you to evaluate three policy options...
Imagine an isolated economy made up of individuals who are both consumers and sellers. The table...
Imagine an isolated economy made up of individuals who are both consumers and sellers. The table below tracks the income and spending of a small part of this economy: 8 individuals called A through H. Naturally, the whole economy includes additional people Assume that individual A has just decided to spend $9.000 in a store owned by individual Band that individual B, along with everyone else in this economy, has a marginal propensity to consume (MPC) of 0.8. points Instructions:...
Imagine an isolated economy made up of individuals who are both consumers and sellers. The table...
Imagine an isolated economy made up of individuals who are both consumers and sellers. The table below tracks the income and spending of a small part of this economy: 8 individuals called A through H. Naturally, the whole economy includes additional people. Assume that individual A has just decided to spend $11,000 in a store owned by individual B and that individual B, along with everyone else in this economy, has a marginal propensity to consume (MPC) of 0.8. Instructions:...
I consider an economy with two individuals (1 and 2). A, B, and C are three points that belong to the utility possibility frontier of the economy. The individual utilities (Ul. U2) at the three points are as follows: Pointsul U2 A 4 21 B 8 17 C 14 6 Now consider point D. Pointul U2 D 9 15 a. Does point D lie on the utility possibility frontier? How does the answer change if you know the utility possibility...
2) Consider an Exchange economy composed of two individuals A and B and two goodsx1 and x2. Individual A has an endowment of W(3,5) and individual B has an endowment of Wa^- (3,3). A's utility function is given byUA Xx2. Suppose that B is neutral about x1 (neither increasing nor decreasing the amount of x1 affects her utility) and she prefers more of x2 to less. Specifv a utility function for B. Eind the equilibrium price and allocations. 3) Consider...
4) (8 points) Consider an exchange economy composed of two individuals A and B and two goods xi and x2. Individual A has an endowment of wA2,4) and individual B has an endowment ofw (3,3). A's utility function is given bỵU,-x1 X2. Individual B's utility, function is giyen bỵ UB-X1 X22. Eind the equilibrium price and allocation.
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?
5. Imagine there is an economy with pure exchange with two
individuals (1 and 2). A, B and C are three points that belong to
the utility possibility frontier (UPF) of the two individuals.
a) According to the information of the previous table, is the
following statement true or false: "The point D (2,5) belong to the
UPF"
b) Please explain why it is true or false.
c) If the Social Welfare Function (SWF) of this economy is W=
U1+...
2. Consider two citizens, Bill and Ted, who live in the fictional country of "Econoland". Bill works as a lawyer and eams $50 per hour. Ted works at Meijer and earns $6 per hour. Both Bill and Ted have identical utility functions equal tou=y"(which is the same as U=JT)where yìs take-home pay (which also equals consumption, if neither Bill nor Ted save). The govemment of Econoland is concemed about i President of Econoland wants you to evaluate three policy options...
Imagine an isolated economy made up of individuals who are both consumers and sellers. The table below tracks the income and spending of a small part of this economy: 8 individuals called A through H. Naturally, the whole economy includes additional people Assume that individual A has just decided to spend $9.000 in a store owned by individual Band that individual B, along with everyone else in this economy, has a marginal propensity to consume (MPC) of 0.8. points Instructions:...
Imagine an isolated economy made up of individuals who are both consumers and sellers. The table below tracks the income and spending of a small part of this economy: 8 individuals called A through H. Naturally, the whole economy includes additional people. Assume that individual A has just decided to spend $11,000 in a store owned by individual B and that individual B, along with everyone else in this economy, has a marginal propensity to consume (MPC) of 0.8. Instructions:...
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