Robert and Erin are trapped on a deserted island with only two goods: Wine (W) and...
Question 1: Robert and Erin are trapped on a deserted island with only two goods: Wine (W) and Crackers (C). Robert currently has 6 bottles of wine and 9 boxes crackers whereas Erin has 9 bottles of wine and 6 boxes of crackers. Robert's preferences are represented by his utility function UR = W0.6C0.4 and Erin's by UE = W0.400.6. (a) Calculate MRSWc for both Robert and Erin. Are they the same or different given their endowments of W and...
Question 1: Robert and Erin are trapped on a deserted island with only two goods: Wine (W) and Crackers (C). Robert currently has 6 bottles of wine and 9 boxes crackers whereas Erin has 9 bottles of wine and 6 boxes of crackers. Robert's preferences are represented by his utility function UR = W0.6C0.4 and Erin's by UE = W0.400.6. Suppose instead that Robert and Erin used a market to trade and that the prices of each good are such...
Consider a two countries, Portugal and England, that produce two goods, wine and cheese, with only one factor of production, Labor. In England, one unit of labor can produce 2 units of wine or 1 unit of cheese. In Portugal, one unit of labor can produce 3 units of wine or 1/2 of cheese. There are 100 units of labor in Portugal, and 100 in England. Countries share the same tastes, and there is perfect competition. 1) Fill in the...
2. Suppose that Home and Foreign consumers have the same preferences over these two goods, and they are represented by the following utility function: U(Q ,Q ) = Q1/3Q2/3. cwcw a. Graph the consumer budget line of the Home country and add indifference curves to the figure. Find the amount of cheese and wine that people in Home country consume in the no-trade equilibrium? b. Graph the consumer budget line of the Foreign country and add indifference curves to the...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...