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Consider two individuals M and F who must split 20 units of good X and 10 units of good Y. Suppose we can represent M's preference with the utility function
Um =X^2mYm and Fs preference with the utility
Uf = min{Xf, 2Yf}
Where Xm and Xf indicate their X consumption, while Ym and Yf indicate their Y consumption
a) Derive the MRS for M
b) Interpret F's utility function
c) Find and graph the contract curve
d) What is the ratio of the price of X to the Price of Y in competitive equilibrium?
e) To which allocation will M and F trade? Indicate this outcome clearly in your graph
If the MU of the 1st unit consumed = 75 utils, and the TU of consuming 2 units is 130 utils, what is the marginal utility of the second unit?
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Rationale of Group Project Group project allows you to pursue authentic learning with your peers, and to apply theories taught in class and textbooks to real world situations.
what is supply and demand
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