What is the equilibrium allocation for this economy

Reference no: EM131209288

Assume, instead, that the economy in exercise 19.10 lasts only for two periods. In the first period, there is only a young consumer. In the second period, there is one old consumer and a new young consumer. At the end of the second period, the economy terminates.

a. What is the equilibrium allocation for this economy?

b. Is it ancient?

c. What is the fundamental difference between this economy and that of exercise 19.10?

Exercise 19.10

A possible explanation for the indecency might be the fact that the consumers are not all alive at the same time and therefore some mutually advantageous trades cannot occur. Consider an economy where consumer t receives an endowment of 1 unit of the single consumption good at time t and obtains utility only from consumption at times t and t + 1. All consumers meet at time 0 to trade. What is the equilibrium? Is exigency restored?

Reference no: EM131209288

Questions Cloud

Can the optimal allocation be reached by trade : At any point in time, what are the feasible consumption allocations between the young and the old consumers who are alive at that point? Given the preferences, which allocation is optimal?

Tax-deductible interest : Given that an S&L is willing to lend money at a loan to value ratio of 75 percent, how big a home equity credit line can max and claudia obtain? how much, if any, of this line would qualify as tax-deductible interest if their house originally cost..

Discuss the applicable federal tax laws and rulings : Discuss the applicable federal tax laws, regulations, rulings, and court cases related to the inventory write-downs, and explain the specific relevance of each to the write-down.

How do sweep accounts affect required reserves : What are sweep accounts? - How do sweep accounts affect required reserves? - Are balances in sweep accounts subject to reserve requirements?

What is the equilibrium allocation for this economy : Consider an economy where consumer t receives an endowment of 1 unit of the single consumption good at time t and obtains utility only from consumption at times t and t + 1. All consumers meet at time 0 to trade. What is the equilibrium? Is exigen..

What is balance of payments : What is balance of payments? How can one hedge from exchange rate fluctuations while exporting and importing?

Why well developed secondary market important for operation : How does this affect the primary market for each security? - Why are well- developed secondary markets important for the operation of an efficient financial system?

Can money be valuable in an infinite economy : This consumer owns one unit of money but has no endowment of the consumption good. Money has no intrinsic value.

Difficulties you envision in the project and why : Consider the average output rate out of the FDA review. If there are 200 projects in the pipeline for basic research, how does this project fare? What kind of performance is required to warrant a financial investment?

User Account

All Pages