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Exchange: Anna’s utility function is UA(x 1 A, x2 A) = x 1 A + 2p x 2 A, while Bailey’s utility function is UB(x 1 B, x2 B) = x 1 B + 4p x 2 B, where the superscript indicates the good and the subscript names the person. Anna’s initial endowment of goods 1 and 2, respectively, is given by ω 1 A = 8 and ω 2 A = 12. Bailey’s initial endowment is ω 1 B = 8 and ω 2 B = 4.Draw the Edgeworth box. Label the initial endowments with the letter E.
a) Draw in some indifference curves for each person and show the contract curve for this exchange economy.
b) Find the competitive equilibrium prices and quantities. (You know what the prices have to be at the competitive equilibrium, because you know what the marginal rates of substitution have to be at every Pareto optimum point in this particular economy.)
C) Derive MRS
You have won the state lottery. There are many ways in which you can receive your prize. You can either have $1 million in cash now or you can have $1.2 million that is paid out as follows: $300,000 now, $300,000 in one year's time, $300,000 in 2 yea..
An electric utility company uses natural gas as fuel for a large multi-unit power plant. with all units in service, for a given hour the plant's fixed cost is $120,000 and its variable cost is $50 per megawatt demanded. What is the hourly demand in m..
A consumer has preferences u(x) = 2x 1 2 1 + x2. The price of good 1 is p1 > 0 and the price of good 2 is 1. You may restrict your attention to interior solutions throughout. Explain whether these preferences are i) monotonic, ii) quasilinear, iii) e..
Can you describe how these participants contribute to the GDP [Gross Domestic Product] and to the economic growth? How can the economy bounce back quickly from the recession? As we begin fleshing out the Wheel of Income and the National Income Accoun..
Discuss the advantages of E-Commerce - Discuss E-Commerce and E-Business and how e-business is helping corporates in business.
If each of the firms sets its own output rate to maximize its profits, assuming that the other firm holds its rate of output constant.
q.start at the original correct equilibrium cost and quantity in part a. assume which the government wishes to decrease
Suppose a certain state increases the license fees that physicians must pay from $500 to $2000 per year. Trace out the impact of the increase in fees an average cost, average variable cost, fixed cost, and marginal cost for physicians operating in th..
Which of the following would occur if the federal government decided to use a budget surplus to reduce the existing debt.
Illustrate now have to lend out how much does this bank if it decides to hold only required reserves.
What is the inflation year over this year? What nominal or money interest rate would the investor receive?
Explain how much smaller (in percentage terms) is each generation than the previous generation.
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