1. Read carefully chapter 16 concerning general equilibrium analysis. Answer the following questions: In a general equilibrium analysis with two substitute goods, x and y, explain what would happen to the price in market x and y if supply of good y increased? How would your answer differ if x and y were complements? а. b. Can the utility possibilities frontier ever be upward sloping? Why? c. Explain how consumers in an economy can be made better off if the marginal rate of transformation does not equal consumers' marginal rate of substitution?

1. Read carefully chapter 16 concerning general equilibrium analysis. Answer the following questions: In a general equilibrium analysis with two substitute goods, x and y, explain what would happen to the price in market x and y if supply of good y increased? How would your answer differ if x and y were complements? а. b. Can the utility possibilities frontier ever be upward sloping? Why? c. Explain how consumers in an economy can be made better off if the marginal rate of transformation does not equal consumers' marginal rate of substitution?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter5: Markets In Motion And Price Controls

Section: Chapter Questions

Problem 10P

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