5. Given that excess demands are continuous and satisfy Walras' law, use Brouwer's Fixed Point Theorem to establish the existence of competitive equilibrium in a simple exchange economy. Suppose that an apple orchard is located next to a bee keeper. If the orchard produces x apples and the bee keeper produces y honey and the cost functions of the two are as follows: C(x) = x² + 10x +9 C(y) = y² - 8x What will be the socially optimal amount of apples that can be produced? How does this compare to privately optimal amount?

5. Given that excess demands are continuous and satisfy Walras' law, use Brouwer's Fixed Point Theorem to establish the existence of competitive equilibrium in a simple exchange economy. Suppose that an apple orchard is located next to a bee keeper. If the orchard produces x apples and the bee keeper produces y honey and the cost functions of the two are as follows: C(x) = x² + 10x +9 C(y) = y² - 8x What will be the socially optimal amount of apples that can be produced? How does this compare to privately optimal amount?

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 9CQ

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