A two-person economy consists of Ann and Bob. Both of them only consume x and y....
A two-person economy consists of Ann and Bob. Both of them only consume x and y. Ann’s utility over these two goods is UA(xA, yA) = xAy2A and Bob’s utility is UB(xB, yB) = x2ByB. Initially, Ann is endowed with 9 units of x and zero units of y; Bob is endowed with 6 units of y and zero units of x.
(a) Write Ann’s marginal rate of substitution in terms of xA and yA and Bob’s marginal rate of substitution in terms of xB and yB.
(b) Derive the equation for the Pareto set (or contract curve).
(c) Find the general equilibrium allocation of x and y among Ann and Bob in the above economy
Homework Answers
Add Answer to:
A two-person economy consists of Ann and Bob. Both of them only
consume x and y....
Edgeworth box with quasi linearity There are two economic agents, A and B. Utility functions are the following u4(xA, y...
Edgeworth box with quasi linearity There are two economic agents, A and B. Utility functions are the following u4(xA, yA) A +YA and uB(xB,yB):= 2\/xB+YB- (a) The endowment for the economy is (ī,g) = (10,20). Find the set of all Pareto efficient allocation such that TA > 0, xg > 0, YA > 0, yB > 0 0 (i.e. y; E (-0, 00) for i E {A, B}). The endowment for the (b) Assume A 20 and TB economy is...
Consider a pure exchange economy with two individuals (A and B) and two goods (x and...
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)...
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...
Aggregate excess demand functions of pure exchange economy
Consider a pure exchange economy of two individuals (A and B) and two goods (X andY).Assume both the individuals are endowed with 2 units of good X and 1 units of good Y each.let utility functions of individual A and B be UA=min{XA,YA} and UB=min{XB4,YB},where Xi and Yi for i={A,B} represent individual i's consumption of good X and Y respectively. Determine the aggregate excess demand functions for each good.
Use the following information for Q4 and 25. There are two consumers A and B with...
Use the following information for Q4 and 25. There are two consumers A and B with the following utility functions and endowments: UA (XA, YA) = x A +aya, (W2A, WyA) = (1,2) UB(XB, YB) = {b + yb, wzB, WyB) = (2, 1) where a>1, X; and Yi denote the consumption of goods x and y for consumer i, and (Wri, Wyi) denote the endowment of goods x and y for consumer i. Q4: True or false. At any...
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...
In an exchange economy, there are two people (A and B), and two goods (X and...
In an exchange economy, there are two people (A and B), and two goods (X and Y). The utility functions of A and B are given by UA = XẪYẦ and UB = XểYa. There are 10 units of X and 10 units of Y in total. Which of the following gives a condition for Pareto optimality? 20X 30XA (Continued from previous question) Suppose person A is originally endowed with all 10 units of good X and person B is...
Anything will help Consider a pure exchange economy with two goods, wine (x) and cheese (y)...
Anything will help
Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con- sumers, A and B. Let cheese be the numeraire good with price of $1. Consumer A's utility function is UA(x, y) = xy and B's utility function is UB(x, y) = min [x, y). A has an initial allocation of 10 x and no y, and B has an initial allocation of 10 units of y and no x. (a) Put...
Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con-...
Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con- sumers, A and B. Let cheese be the numeraire good with price of $1. Consumer A's utility function is UA(x; y) = 2x+y and B's utility function is UB(x; y) = xy. A's initial allocation is 10 units of x and 0 units of y. B's initial allocation is 0 units of x and 30 units of y. (a) Put wine x on the...
Edgeworth box with quasi linearity There are two economic agents, A and B. Utility functions are the following u4(xA, yA) A +YA and uB(xB,yB):= 2\/xB+YB- (a) The endowment for the economy is (ī,g) = (10,20). Find the set of all Pareto efficient allocation such that TA > 0, xg > 0, YA > 0, yB > 0 0 (i.e. y; E (-0, 00) for i E {A, B}). The endowment for the (b) Assume A 20 and TB economy is...
Use the following information for Q4 and 25. There are two consumers A and B with the following utility functions and endowments: UA (XA, YA) = x A +aya, (W2A, WyA) = (1,2) UB(XB, YB) = {b + yb, wzB, WyB) = (2, 1) where a>1, X; and Yi denote the consumption of goods x and y for consumer i, and (Wri, Wyi) denote the endowment of goods x and y for consumer i. Q4: True or false. At any...
In an exchange economy, there are two people (A and B), and two goods (X and Y). The utility functions of A and B are given by UA = XẪYẦ and UB = XểYa. There are 10 units of X and 10 units of Y in total. Which of the following gives a condition for Pareto optimality? 20X 30XA (Continued from previous question) Suppose person A is originally endowed with all 10 units of good X and person B is...
Anything will help
Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con- sumers, A and B. Let cheese be the numeraire good with price of $1. Consumer A's utility function is UA(x, y) = xy and B's utility function is UB(x, y) = min [x, y). A has an initial allocation of 10 x and no y, and B has an initial allocation of 10 units of y and no x. (a) Put...
Most questions answered within 3 hours.
-
On May 1, First Bank perfected a security interest in Debtor’s
inventory. On June 1, Bob...
asked 25 minutes ago -
A new kind of typhoid shot is being developed by a medical
research team. The old...
asked 1 hour ago -
Write a chemical equation for these reactions. (Use
the lowest possible whole number coefficients.) Include
states-of-matter...
asked 3 hours ago -
For each of the Z-scores below, determine two probabilities
(show four three decimal places): (1) the...
asked 4 hours ago -
Oxidative phosphorylation is achieved through chemiosmotic
coupling, which turns chemical energy into osmotic potential energy
that...
asked 7 hours ago -
Hollywood Shoes would like to maintain their cash account at a
minimum level of $64,000, but...
asked 7 hours ago -
Proteins CtrA-P, DnaA, and GcrA behave similarly to what
molecule in the Eukaryotic Cell Cycle?
asked 7 hours ago -
TRUE OR FALSE
In case of a competitive tender procedure, in the request for
quotation, the...
asked 7 hours ago -
I am a little behind please provide some explanation, will
provide thumbs up.
This question considers...
asked 7 hours ago -
Let say the utility function as U(X,Y) = lnX + Y. Show that the
marginal rate...
asked 7 hours ago -
A current of I=8.0A is flowing in a typical extension cord of
length L=3.00m. The cord...
asked 7 hours ago -
1. When balancing the equation H2SO4 (aq) + NaOH (aq) →
Na2SO4(aq) + H2O(aq), would you...
asked 8 hours ago