1. Kamal (K) and Jamal (J) are the only two individuals in an exchange economy consisting of only two goods, namely 100 units of mangoes (m) and 100 units of guavas (g). The utility functions of Kamal and Jamal are represented by (m+8x)=m*g* and U, (m,.g,)=m, g3 respectively. Furthermore, m + m, 100 and gx + g = 100. 3/4 1/4 3/4 UK (a) Show that the efficient allocation of mangoes and guavas for Jamal is given by the following condition 8, 9m, 100-g, 100-m, (Hint: Let Kamal's utility be fixed at U, then solve the Lagrangian L=U, (m,.g,) + 2[U (m.8)-U1) (b) Copy and complete the following table: 81 mj 8K mk U₁ UK 0 20 40 60 100
1. Kamal (K) and Jamal (J) are the only two individuals in an exchange economy consisting of only two goods, namely 100 units of mangoes (m) and 100 units of guavas (g). The utility functions of Kamal and Jamal are represented by (m+8x)=m*g* and U, (m,.g,)=m, g3 respectively. Furthermore, m + m, 100 and gx + g = 100. 3/4 1/4 3/4 UK (a) Show that the efficient allocation of mangoes and guavas for Jamal is given by the following condition 8, 9m, 100-g, 100-m, (Hint: Let Kamal's utility be fixed at U, then solve the Lagrangian L=U, (m,.g,) + 2[U (m.8)-U1) (b) Copy and complete the following table: 81 mj 8K mk U₁ UK 0 20 40 60 100
Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 10SQ
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