Consider the endowment economy. Jason has a utility function of uJ (c1, c2) = ln(c1) +...
Consider the endowment economy. Jason has a utility function of uJ (c1, c2) = ln(c1) + 1 2 ln(c2). Tahani has a utility function of uT (c1, c2) = min {c1, c2} . The endowments are eJ = (1, 2) and eT = (2, 1).
a. Define the competitive equilibrium for this economy.
b. Calculate the market clearing prices and the equilibrium allocation
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Consider the endowment economy. Jason has a utility function of
uJ (c1, c2) = ln(c1) +...
3. Consider a two consumer endowment economy. Consumer 1 and consumer 2 come into the economy...
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...
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...
Consumer A has a utility function u(x,y) = xA + yA and an endowment of (x,y)...
Consumer A has a utility function u(x,y) = xA + yA and an endowment of (x,y) = (25,5). Consumer B has a utility function u(x,y) = min{xB,yB} and an endowment (x,y) = (25,45). a. Carefully sketch the Edgeworth Box and indicate where the endowment is. b. What is A’s utility and B’s utility if they each simply consumer their endowments? c. Next, add the indifference curve for A and B, through their endowments in your Edgeworth Box. d. Find a...
Consider a two-period economy discussed in Chapter 9. Suppose there are only two households, and each...
Consider a two-period economy discussed in Chapter 9. Suppose there are only two households, and each household's utility function and endowment are given as follows. u' (C1,C2) = (C122) and e' = (18,4). u? (C1,C2) = Incı + 2 Inc and e? = (3,6). el denote the allocation of endowment income for household i. For simplicity, there is no government, and therefore no tax in both periods. There is a perfectly competitive credit (financial market in which they can buy...
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...
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...
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...
Janet has life time utility given by ln c1 + 0.7 ln c2. Janet currently consumes...
Janet has life time utility given by ln c1 + 0.7 ln c2. Janet currently consumes the bundle (1000, 600). The level of happiness Janet gets from this bundle is____ utils. If 8 units of c2 is taken away from her, her life time utility will fall roughly by____ utils. At this point, Janet is willing to exchange units of c1 for one unit of c2. If the real interest is 0%, Janet will (save more, less, the same amount.)...
9) (10 points) Consider an exchange economy composed of two individuals A and B and two...
9) (10 points) Consider an exchange economy composed of two individuals A and B and two goods x1 and X2. A's utility function is given bỵ U,-2X1 + X2. Individual B's utility function is givenby u = xx2. In the economy, the total endowment of xņš 2 and the total endowment of x2 is 1. Normalize p2 to 1. We know that, in this economy eauilibrium price is given bypi-1. a. (6 points) Find the equilibrium allocation b. (4 points,...
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...
Consider an exchange economy with two consumers, A and B, who can consume only two goods....
Consider an exchange economy with two consumers, A and B, who can consume only two goods. Suppose consumers’ preferences are represented by a Cobb- Douglas utility function of the form u(x1i,x2i) = x1ix2i (here i is for consumer A or B) for a consumption bundle of two goods (x1i,x2i). The consumers have endowments eA = (e1A;e2A) = (4;1) and eB = (e1B;e2B) = (1;4). The price of good 1 is p1 and the price of good 2 is p2. You...
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...
Consider a two-period economy discussed in Chapter 9. Suppose there are only two households, and each household's utility function and endowment are given as follows. u' (C1,C2) = (C122) and e' = (18,4). u? (C1,C2) = Incı + 2 Inc and e? = (3,6). el denote the allocation of endowment income for household i. For simplicity, there is no government, and therefore no tax in both periods. There is a perfectly competitive credit (financial market in which they can buy...
9) (10 points) Consider an exchange economy composed of two individuals A and B and two goods x1 and X2. A's utility function is given bỵ U,-2X1 + X2. Individual B's utility function is givenby u = xx2. In the economy, the total endowment of xņš 2 and the total endowment of x2 is 1. Normalize p2 to 1. We know that, in this economy eauilibrium price is given bypi-1. a. (6 points) Find the equilibrium allocation b. (4 points,...
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...
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