Calculate price of good-will lead to competitive equilibrium

Assignment Help Business Economics

Reference no: EM131007098

Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 3 units of good X and 8 units of good Y. Consumer B is given an initial endowment of 3 units of good X and 4 units of good Y.
Consumer A’s utility function is given by: UA(X,Y) = X4*Y,
And consumer B’s utility function is given by UB(X,Y) = X*Y.
Therefore, consumer A’s marginal utilities for each good are given by:
MUX = 4X3Y
MUY = X4
Also, consumer B’s marginal utilities for each good are given by:
MUX = Y
MUY = X
Suppose the price of good Y is equal to one. Calculate the price of good X that will lead to a competitive equilibrium.

Reference no: EM131007098

Questions Cloud

How the marginal rate of technical substitution falls : Illustrate graphically and explain in words how the marginal rate of technical substitution falls as you move down an isoquant curve. Look at the figure Price Controls. A price ceiling has been imposed at point d. Identify the areas that correspond t..

If the accounting profit for a firm is negative : If the accounting profit for a firm is negative, the:

What is time budget constraint-marginal utility of exercise : Bob is awake for 15 hours a day and divides that time between hours of exercise, x, and hours of study, s. Bob’s preferences are represented by the following utility function. What is Bob's time "budget constraint"? What is Bob's marginal utility of ..

Use to be elected mayor of a university town : One strategy I might use to be elected mayor of a university town is to place a binding price ceiling on rent for student apartments. What will happen if I get elected and am able to pass such a law?

Calculate price of good-will lead to competitive equilibrium : Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 3 units of good X and 8 units of good Y. Consumer B is given an initial endowment of 3 units of good X and 4 units of good Y. Suppose the..

Trademark law does not allow the holder to sell trademark : Trademark law does not allow the holder to sell a trademark independent of the good to which it is attached. Thus, Coca-Cola cannot sell its use of the trademark "Coke" to another producer of cola syrup that mark may be sold only with the syrup produ..

Steady state of the solow model with population growth : Draw a well-labeled graph that illustrates the steady state of the Solow model with population growth. Use the graph to find what happens to steady-state capital per worker and income per worker in response to each of the following exogenous chang..

Show a power press and identify the location of each item : Search online at http://www.osha.gov and from 29 CFR 1910.211 Definitions, define the following power press terms: brake, clutch, two-hand control device, die, foot pedal, pinch point, point of operation. Regulations for power presses are presente..

What defenses will the bank assert : Is the bank liable for the janitor's negligence? Be sure to go through all of the elements. Additionally, note that under the doctrine of respondeat superior the bank WILL be liable for any potential negligence of the janitor employee. What defe..

User Account

All Pages