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4) (8 points) Consider an exchange economy composed of two individuals A and B and two...
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...
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) This guestion is from Final 2016. Consider an Exchange economx composed of twO individuals A...
2) This guestion is from Final 2016. Consider an Exchange economx composed of twO individuals A and B and two goods x1 and x2. Individual A has an endowment of WA-(3,5) and individual B has an endowment of Ws- (3,3). A's utility function is given by UA- Xx2 a. (3 points) Show that no matter what utility function B has, there exists a Pareto Efficient (PE) allocation. (i.e. Speciỵa Pareto efficient allocation and explain why it is efficient nomatter what...
Consider an exchange economy consisting of two people, A and B, endowed with two goods, 1...
Consider an exchange economy consisting of two people, A and B, endowed with two goods, 1 and 2. Person A is initially endowed with wA(4,8) and person B is initially endowed with w(4,0). Their preferences are given by UA(ri,r2)1 and UB(xi, r2) (a) Write the equation of the contract curve (express as a function of ) (b) Let P2 Find the cornpetitive equilibrium price, pi, and allocations, xA -(zl,r1) and B-B (c) Now suppose that person B's preferences are instead...
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)...
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...
Pure Exchange Model 1. Consider a Pure Exchange Economy with two agents A and B and...
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)...
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...
10. Consider a pure exchange competitive market economy with two individ- uals, A and B, and...
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...
Consider an exchange economy consisting of two people, A and B, endowed with two goods, 1...
Consider an exchange economy consisting of two people, A and B, endowed with two goods, 1 and 2. Person A is initially endowed with ωA= (10,0) and person B is initially endowed with ωB= (0,20),where the first component of each vector indicates the endowment of good 1.Their preferences are given by UA(x1, x2) =x10.6x20.4 and UB(x1, x2) = 3x1+x2. Which of the following choices represents the contract curve in this economy (in terms of A’s coordinates)? (a) x2A=(xA1)/3 (b) x2A=(2xA1)/9 ...
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...
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) This guestion is from Final 2016. Consider an Exchange economx composed of twO individuals A and B and two goods x1 and x2. Individual A has an endowment of WA-(3,5) and individual B has an endowment of Ws- (3,3). A's utility function is given by UA- Xx2 a. (3 points) Show that no matter what utility function B has, there exists a Pareto Efficient (PE) allocation. (i.e. Speciỵa Pareto efficient allocation and explain why it is efficient nomatter what...
Consider an exchange economy consisting of two people, A and B, endowed with two goods, 1 and 2. Person A is initially endowed with wA(4,8) and person B is initially endowed with w(4,0). Their preferences are given by UA(ri,r2)1 and UB(xi, r2) (a) Write the equation of the contract curve (express as a function of ) (b) Let P2 Find the cornpetitive equilibrium price, pi, and allocations, xA -(zl,r1) and B-B (c) Now suppose that person B's preferences are instead...
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)...
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...
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...
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