1. Consider the following Robinson Crusoe economy. There is one consumer, one producer, two goods X,...
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...
Consider a pure exchange economy with two individuals (A and B) and two goods (x and y). The utility functions are given by UA(xA, yA) = min[xA, yA] UB(xB, yB) = min[xB, yB], where xi and yi are the quantities of the two goods consumed by individual i = A, B. The total endowments are wx = 10 and wy = 5. (a) Represent the indifference curves of both individuals in the Edgeworth box and find the Pareto set. (b)...
nformation P Flag question Consider a simple exchange economy where there are two producers, one producing Good X and the other Y. There are in total 100 units of K and 800 units of L in the economy. The production function of X Is X (KxLx)=10 K40.42X0.6 and that of Y is Y(Ky, Ly)= 4Ky + Ly Currently, the X production is using 60 units of K and 60 units of L. Follow the steps below to check if the...
16.8 Business Application: Valuing Land in Equilibrium Suppose we consider a Robinson Crusoe economy with one worker who has preferences over leisure and consumption and one firm that uses a constant returns to scale production process with inputs land and labor A. Suppose that the worker owns the fixed supply of land that is available for production. Throughout the problem, normalize the price of output to 1 Explain why we can normalize one of the three prices in this economy...
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...
QUESTION 17 PLEASE. NA compare them with your findings in part (b). 17. In a two person-two good economy, goods X and Y are perfect complements for John and Mary. There are 12 units of X and 6 units of Y available. Initially, John has 8 units of X and 2 units of Y and Mary has 4 units of X and 4 units of Y. (a) Draw an Edgeworth Box associated with this economy. Show the initial allocation and...
Information P Flag question Consider a simple exchange economy where there are two producers, one producing Good X and the other Y. There are in total 100 units of K and 800 units of L in the economy. The production function of X is X (Kx, Lx) = 4Kx + Lx and that of Y is Y(Ky, Ly)= Ky 10.4 L, 0.6 Currently, the y production is using 60 units of K and 60 units of L. Follow the steps...
17. In a two person-two good economy, goods X and Y are perfect complements for John and Mary. There are 12 units of X and 6 units of Y available. Initially, John has 8 units of X and 2 units of Y and Mary has 4 units of X and 4 units of Y Draw an Edgeworth Box associated with this economy. Show the initial allocation and plot the (a) i both John and Marry that pass through the initial...
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)...