2.- There are 10 consumers in the market for Corn, 5 have income $20 and 5 have income $40. Each of them has preferences over corn (C) and Barley (B), the only two goods they consume, represented by the utility function U(C, B) = C x B. (The price of Barley, is $1.) There are 10 firms that produce Corn using labor L and land K, with the production function C = LiKi. Each firm has a lease on a plot of land of size 10 (acres). The --rental-- price for K is r= 0.5 and the wage rate is w= 3. In the short run (this problem refers to the short run), K is then fixed for cach firm. Obtain the (individual and then market) demand and the supply functions of C, and then compute the equilibrium price and quantity in this market.

2.- There are 10 consumers in the market for Corn, 5 have income $20 and 5 have income $40. Each of them has preferences over corn (C) and Barley (B), the only two goods they consume, represented by the utility function U(C, B) = C x B. (The price of Barley, is $1.) There are 10 firms that produce Corn using labor L and land K, with the production function C = LiKi. Each firm has a lease on a plot of land of size 10 (acres). The --rental-- price for K is r= 0.5 and the wage rate is w= 3. In the short run (this problem refers to the short run), K is then fixed for cach firm. Obtain the (individual and then market) demand and the supply functions of C, and then compute the equilibrium price and quantity in this market.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.2P

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