5. Consider an exchange economy with A and B, where A has an endowment of x = 5 & y = 25, and B has an endowment of x = 20 & y = 10. Both A and B have the utility function u(x,y) = xy. Say A gives B 6 units of y, and B gives A 3 units of x. After the trade
(a.)Both are better off
(b.)Only A is better off
(c.)Only B is better off
(d.)Both are worse off
6. In an exchange economy, A has an endowment of 10 units of x and 30 units of y, and B has 30 units of x and 15 units of y. Both A and B have u(x,y) = xy. If the price of x is $5, and the price of y is $6, then A has an income of ____ and B has an income of ____.
(a.) 260; 180
(b.) 260; 240
(c.) 230; 180
(d.) 230; 240
7. Consider the economy in problem 6. In this economy, A’s optimal demand for good x is (a.) 15.5 (b.) 17.2 (c.) 23 (d.) 11 8.Consider the economy in problem 6. Find B’s optimal demand for good x.
(a.)19.5
(b.)20
(c.)22.5
(d.)24
8. Consider the economy in problem 6. Find B’s optimal demand forgood x.
(a.) 19.5
(b.) 20
(c. )22.5
(d.) 24
5. Consider an exchange economy with A and B, where A has an endowment of x...
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...
10. Consider a pure exchange competitive market economy with two individ- uals, A and B, and two commodities, x and y, whose prices are denoted by px and py, respectively. Individual A lexicographically prefers x to y. Individual B's utility function is min{x,y}. Both individual A's and B's endowment is (50,50). A competitive equilibrium price ratio, Px/py, for this economy (a) exists and is equal to 1 (b) exists and is less than 1 (c) exists and is greater than...
An exchange economy has two consumers, A & B, and two types of goods, x & y. A has an endowment of x = 20 & y = 15, and B has an endowment x = 10 & y = 20. If after a trade A winds up with 18 units of x and 22 units of y, then B must have (x,y) = (a.) (10,20) (b.) (12,20) (c.) (12,13) (d.) (10,13) Graph and label it please, thanks!
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...
An economy has a labor endowment of 24 units. Good x has the production function x = 10Lx and good y has the production function y = 2(Ly)0.5, where Lx and Ly are the labor units allocated to sector x and y, respectively. Find output x if a third of labor endowment goes to producing good x. 65 70 72 80
Question 2 1 pts = Consider a pure exchange endowment economy where consumers are given endowments equal to (WA, TA, TB, UB) (2,1, 1, 2). Preferences for the consumers are identical and given by 7 for i Ui (Xi, Yi) A, B. What is the excess demand function for the market for good y? 1 4 = = X, Yi 2 1 Pc 2 Py 1 P: - 1 2 ру 3 PC 2 Py - 1 3 PX 2...
An economy has a labor endowment of 18 units. Good x has the production function x = 10Lx and good y has the production function y = 2(Ly)^0.5, where Lx and Ly are the labor units allocated to sector x and y, respectively. Find the equation for the PPF