1. Assume now that Anton has 4 eggs and 4 yoghurts as his
endowment, while Betty's endowment stays the same as before: (8
eggs, 20 yoghurts). What is the equilibrium price ratio
px/py in this economy?
2. Are the following allocations Pareto optimal (efficient)?
Anton (0,0) and Betty (10,22)
Anton (5,11) and Betty (5,11)
Anton (1,4) and Betty (9,18)
Anton (10,0) and Betty (0,22)
Homework Answers
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1. Assume now that Anton has 4 eggs and 4 yoghurts as his
endowment, while Betty's...
Pure Exchange Model 1. Consider a Pure Exchange Economy with two agents A and B and...
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)...
3. Consider a two consumer endowment economy. Consumer 1 and consumer 2 come into the economy...
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Two individuals, a and b, consume goods x and y. Their endowments are w(2,5) and wb (10,1). Both ...
Two individuals, a and b, consume goods x and y. Their endowments are w(2,5) and wb (10,1). Both have identical Cobb-Douglas utility functions ui(x,y') xy where i malized to 1; for simplicity we write px as just p. Then consumer i's demand for each good is i 1 2 i m and I 2 where m refers to the value of consumer i's endowment. (a) Draw the set of interior Pareto efficient allocations in an Edge- worth box for this...
Bill has received an endowment ω > 0 of a perfectly divisible consumption good from his...
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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)...
3. Consider a two consumer endowment economy. Consumer 1 and consumer 2 come into the economy with an endowment of good x and good y. They can voluntarily trade their endowments. They have the following utility functions and endowments: W:(z,y) = złyt And they have the following endowments: Consumer 1 61 =(4,12) Consumer 2 ez =(8,6) (a) Set up the utility maximization problem for consumer 2. Then solve for the demand functions of good #2 and good y2 as a...
3. Consider a two consumer endowment economy. Consumer 1 and consumer 2 come into the economy with an endowment of good x and good y. They can voluntarily trade their endowments. They have the following utility functions and endowments: u1(x,y) = zły: u2(z, 1) = a* * And they have the following endowments: Consumer 1 e1 = (4,12) Consumer 2 e2 = = (8,6) (a) Set up the utility maximization problem for consumer 2. Then solve for the demand functions...
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4. General Equilibrium An economy consists of two consumers, indexed by j = A, B, who consume two goods x, and x2. The first consumer's endowment of the two goods is (W1,W4) = (2,4), and the second consumer's endowment is (w,w) = (5,1), where w/ denotes consumer j's endowment of good i. a. Suppose the preferences of the two consumers are described by the utility functions U,(x) = (x^)(x4)4 and U2(x) = xPx, where x denotes consumer j's consumption of...
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