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3. Suppose there are two consumers, A and B. The utility functions of each consumer are...
2. (20 points) Suppose there are two consumers, A and B The utility functions of each consumer are given by: UA(X,Y) XY UB(X,Y) Min(X,Y) The initial endowments are: A: X 1; Y 1 B: X 5; Y 5 Illustrate the initial endowments in and Edgeworth Box. Be sure to label the Edgeworth Box carefully and accurately, and make sure the dimensions of the box are correct. Also, draw each consumer's indifference curve that runs through the initial endowments. Is this...
help solve 2. (16 total points) Suppose there are two consumers, A and B The utility functions of each consumer are given by: UA(XY) = X10*712 U(X,Y)= 4X+Y The initial endowments are A:X = 4: Y = 4 B:X = 4; Y = 12 a) (10 points) Using an Edgeworth Box, graph the initial allocation (label it "W") and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and...
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...
2. Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 2 units of good X and 3 units of good Y. Consumer B is given an initial endowment of 6 units of good X and 5 units of good Y. Consumer A’s utility function is given by: UA(X,Y) = X1/2*Y1/2, And consumer B’s utility function is given by UB(X,Y) = X1/4*Y3/4. Therefore, consumer A’s marginal utilities for...
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...
Q: Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = XY3 UB(X,Y) = X*Y Therefore: For consumer A: MUX = Y3; MUY = 3XY2 For consumer B: MUX = Y; MUY = X The initial endowments are: A: X = 16; Y = 28 B: X = 54; Y = 12 a) Suppose the price of Y, PY = 1. Calculate the price of X, PX that will lead to...
Consider a pure exchange economy two consumers, Rachel and Lauren, and two commodities, watermelon and tomatoes. Rachel’s initial endowment is 4 units of watermelon and 3 units of tomatoes. Lauren’s initial endowment is 2 units of watermelon and 5 units of tomatoes. Rachel and Lauren have identical utility functions: Rachel’s utility is UR(WR,TR) = WRTR where WR and TR is Rachel’s quantity of watermelon and quantity of tomatoes, respectively; similarly, Lauren’s utility is UL(WL,TL) = WLTL where WL and TL...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is UA = Z CA and Deepa' s utility function is U = 29.5C9.5. Adrienne's marginal utility of pizza is MUZ = CA, and her marginal utility of cola is MUS = Z . Similarly, Deepa' s marginal utility of pizza is MU} = -2;0.500.5 and her marginal utility of cola is MUS = -2,5050.5. Their initial holdings of pizza and cola are ZA =...
1. (19 pts) Adrienne and Deepa consume pizza, Z, and cola, C. Adrienne's utility function is UA = ZĄCA and Deepa' s utility function is U = 295c9S. Adrienne' s marginal utility of pizza is MUZ = CA, and her marginal utility of cola is MUS = ZA. Similarly, Deepa' s marginal utility of pizza is MU] =2,05095 and her marginal utility of cola is MUY =2,5c, 0.5. Their initial holdings of pizza and cola are 2A = 10, CA...