2.5 Suppose that the production of goods X and Y is described using the production functions: X = BL, K, Y = (2,/1, +2/K, x. Determine the competitive equilibrium and the social equilibrium. Also calculate the rate of the Pigouvian subsidy to correct for the misallocation of resources under competitive equilibrium.
Q: D(x) is the price, in dollars per unit, that consumers are willing to pay for x units of an item,…
A: In equilibrium, D(x) = S(x) Consumer surplus (CS) = area between demand curve and price Producer…
Q: At the market equilibrium (a) The quantity demanded is equal to quantity supplied (b) The…
A: Market is said to be in equilibrium when quantity demanded by consumers is equal to the quantity…
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A: a) Consumer surplus = $90250 b) Producer surplus = $22562.5 c) Market surplus = $112812.5
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Q: Which of the following is true of market social equilibrium if third parties, people outside the…
A: Externality refers to spill-over effect of a good on third party which is not involved in either…
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A: As per Bartleby policies, we will answer the first three sub-parts only. If you want us to answer…
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A: A subsidy is an immediate or roundabout installment to people or firms, for the most part as a money…
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A: The equilibrium is established where the demand and supply forces are equal. the change in the…
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A: The equilibrium before tax is at Qd=Qs290-20p=80+40p60p=210p=3.5Q=290-20*3.5Q=220the equilibrium…
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A: Maximization of net benefits is when marginal cost equals marginal revenue.
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Q: p= (q – 4)² p =q° +q+7, The inverse demand and supply functions for a product are given by and…
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Q: Given the demand function d(q) = -0.8q+150 and the supply function s(q) = 5.2q, find the equilibrium…
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A: Equilibrium is achieved where quantity demanded equals quantity supplied.
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A: For good X: MRTS = 1 dFdKdFdL= 1 For food Y : K=L
Q: Region A (the purple shaded area) represents the total producer surplus when the market price is $ ,…
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Q: The Invisible Hand Principle states that individuals' independent efforts to maximize their gains…
A: Since you have posted multiple question, so as per answering guideline, First question will be…
Q: Suppose market demand is given by the equation Q° = 40 – 2P Refer to Scenario. If the market…
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A: Given: Equilibrium price = $16 Equilibrium quantity = 24,000 units Demand price for the first unit =…
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- Come up with an example with four agents and four items in which there is only one Pareto efficient allocationConsider two substitute products; movies and Box Office rentals. With the aid of graphical illustrations, explain why the outcome of a general equilibrium analysis can differ substantially from that of a partial equilibrium analysis, when evaluating the impact of a unit tax on movie tickets.Dear tutor, please solve these True/False Questions. Thank You! Can it be efficient for one trader to consume all units of the goods while the other trader consumes nothing? In other words, does this point lie on the contract curve? A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.
- Show that when all consumers and producers are price takers, a competitive equilibrium is always Pareto optimal.Kindly help on these two question... The result that every competitive equilibrium is pareto efficient. a) the second fundamental theorem of welfare economics. b) Edgeworth's condition c) The first fundamental theorem of welfare economics d) Waras's law 2) Assume that there are two consumers ( A and B) in an economy that have preferences that can can be represented as cobb-douglas utility functions. Also assume that there are two firms that have concave production possibility frontiers over goods x and y . Which of the following conditions must be true for an allocation to be distributivity efficient? Select all that apply. a) all goods in the economy are consumed. b) producers must be operating on their production possibilities frontier. c) all consumers must have marginal rates of substitution that are equal. d) all producers must have marginal rates of transformation that are equal . e) consumers must value goods at the margin at the same rate it costs society to produce themTwo individuals, Fred and Helen, are in an economy with no production, and each have the utility function U = 10XY. Prices of both X and Y are set at $1. Initial endowments for Fred are 10 units of X and 6 units of Y. Helen has 8 units of X and 12 units of Y. Find the general equilibrium prices and allocation, then show that the G.E. allocation is Pareto efficient.
- What does the Pareto efficiency criterion state? A. An allocation of resources is efficient if it maximizes government revenue B. An allocation of resources is efficient if it maximizes producer surplus C. An allocation of resources is efficient if it is impossible to make someone better off without making someone else worse off D. An allocation of resources is efficient if it allocates resources equally among all individualstwo producers, person A and person B, have identical allocations of resources (40 hours of labor each) and produce only food and shelter. if we say person A has absolute advantage in shelter production, we mean that Person AFor the Robinson-Crusoe economy with one input and two outputs, provide a short essay in which you explain why a Walrasian Equilibrium Allocation exists and what properties it has.
- A Gain from Trade occurs when a unit is sold for a price greater than the unit of the good is worth to a seller and, simultaneously, bought for a price less than the good is worth to a buyer. Consider the first 2 units of the good that would be sold in this market (the vertical red line on the graph). Which answer choices are correct? If Kai and Mint sold one unit each to Gob and Yam at a price of $6, the trade would be mutually beneficial. At a price of $6, Gob would benefit by $3 because she is paying $6 for a unit of the good which is worth $9 to her. At a price of $6, Kai would benefit by $4 because she is getting $6 for a unit of the good which is worth $2 to her. For the first 2 units of the good there is potential gain from trade of $7 for each of the 2 units. For the first 2 units of the good sold the difference between the value to buyer and seller is $9 each. This means there is a potential gain from trade of $9 per unit. If the first 2 units of the…Consider the figure attached below which shows the combined production function of Anna and Bob. Assume a case where Anna works on the land owned by Bob. By referring to the diagram above, explain how does Anna ranks the possible allocations marked as X, Y, Z and A according to production functions and their curves and slopes ? Question is complete“How to allocate limited resources in an efficient way (as emphasized in an introductory economics course)?” Explain how the topics covered in this course can help address this issue. [Hint: One useful starting point is the role of NPV (decision rule) in addressing the resource allocation issue.]