5(b) Consider the economy given by W; (1,0) W;- (0,1) U 2x + X22 a. Solve for the set of Pareto optimal allocations. Where is the core? b. Draw an Edgeworth box diagram to represent the economy. C. Solve for the competitive equilibrium,
Q: Discuss the three (3) purposes of the international capital market
A: It consists of both traditional exchanges (where buyers and sellers meet to trade financial…
Q: What are various transport investment projects currently underway in South Africa.
A: The various transport investment projects currently underway in South Africa are the followings:…
Q: It is a scheme to collect taxes on businesses and industries based on the amount of fossil fuels…
A: A kind of pollution tax that is imposed on businesses and individuals to burn carbon-based fuels…
Q: Consider two firms that provide a differentiated product, which they produce at the same constant…
A: In Bertrand price competition, firms decides the price simultaneously.
Q: (REAL-WORLD APPLICATION) You are NOT required to read the oligopoly chapter in the textbook, but you…
A: Introduction Suppose Austrian low cost industry consist of two firms. a) As per the game scenario,…
Q: 2. Given a particular budget, if Mrs. Bain would like to maximize her utility from days of horseback…
A: In consumer equilibrium, the level of satisfaction and utility is determined on the basis of the…
Q: QUESTION 1. Consider two countries: South Korea and New Zealand and two goods: Lamb and Air Pumps.…
A: Production means the goods and services produced in an economy. It means the raw material is…
Q: 1. Refer to the graph on page 2, assuming no budget constraint, which indifference curve represents…
A: An indifference curve basically refers to a graph that shows all of the product combinations that…
Q: It is just or unjust for the state to tax the rich to help the poor?
A: In an economy, government tries to maintain equality among people due to which it helps poor people…
Q: In 2014, a devastating typhoon hit the Philippines, destroying roads and buildings, and killing…
A: The value of all goods and services generated by an economy in a very given year is reflected in…
Q: Which of the following scenarios represent expansionary fiscal policies from both a supply…
A: Economic growth is an increase in the production of goods and services in an economy. Increases in…
Q: Discuss, with the use of demand and supply diagrams, how each of the following scenarios may…
A: a. The increase in interest rates will increase the cost of borrowing which means it will be…
Q: We learned that we can use choice between a gamble over someone's best and worst outcomes and…
A: On a scale of (0 to 1 ) for utility let us consider the utility attained from best possible outcome…
Q: A businessman purchases a common stock worth P1,000 every year for a period of 10 years. At the…
A: A businessman purchases a common stock worth P1,000 every year for a period of 10 years. At the of…
Q: In the Solow model, the steady-state capital stock is a function of:
A:
Q: The principle of the multiplier states that: any increase in aggregate spending that causes…
A: Multiplier: - it is a fraction that shows the magnitude of the change in national income due to a…
Q: What are the techniques used to forecast human resources supply?
A: The forecasting of human resource supply is a process which includes estimation of availability of…
Q: _________ theory of city growth brings urban growth research up to date
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: Question 3 The time it takes a change in economic policy to induce people and firms to change their…
A: There are different types of policy lags: -Recognition Lag -Implementation Lag -Decision Lag…
Q: Suppose using year 1 as the base, you found that real fixed-weight GDP in year 1 was $25,000 and the…
A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…
Q: Draw an AD-SRAS diagram, where the economy is initially at equilibrium and input prices do not move…
A:
Q: What is the major component of the money supply M1? Certificates of deposit Savings deposits…
A: Money supply M1 consists of currency in circulation, demand deposits (both current and saving…
Q: An automobile that cost $670 in 1935 was sold as an antique car for $15,900 in 2005. What was the…
A: Given the value in 1935, PV = $670 Value in 2005, FV = $15900 Years from 1935 to 2005 = 70 years
Q: . The CIT School of Engineering needs P20,000,000.00 to pay for the building renovation in 6 years.…
A: A sum of money today is worth more than a sum of money in the future, according to the notion of…
Q: istinction between short-run and long-run equilibrium and factors affecting it?
A: Short-run equilibrium is the equilibrium that is determined on the basis of aggregate demand and…
Q: If the number of people classified as unemployed is 20,000 and the number of people classified as…
A: The formula for unemployment rate is Unemployment rate = (Unemployed People / Labor Force) * 100…
Q: 01.00 D0.50 0.03 100.20 100.00 99.80 99.60 99.40 99.20 0.02 0.02 0.01 00.00 0.01 09.50 09.00 -0.01…
A: *Answer: The Taylor Rule is a methodology for projecting interest rates that was developed by…
Q: Product Market Houscholds Businesses Factor Market The flow of goods and services to consumers is…
A: The given diagram illustrates the circular flow of income.
Q: The following table illustrates the multipler process In a prtvate closed economy: Change In Income…
A: The process that occurs when there is an initial injection into the circular flow which leads to a…
Q: O a each country will export goods at which it has a comparative advantage at producing and import…
A: If all countries follow free trade policy, economist predict that the comparative advantage in the…
Q: Michelin is considering going "lights out" in the mixing area of the business that operates 24/7.…
A: Given, Mixing Cost : $600,000 per yearIncome-tax rate : 25%MARR : 10%
Q: Suppose that for every open-market operation in the amount of $1, money supply increases by $3,…
A: Open market operations are defined as the buying and selling of treasury bills and the government…
Q: Employers can try solving the adverse selection problem and motivate the employees to work harder by…
A: At the marketplace, the problem of adverse selection arises when any of the trading parties, such as…
Q: Part I. Use the table below as a basis for your responses. 1. Fill in the table below. 2. Based on…
A: Here, the given table shows the total utility and marginal utility of a consumer based on the number…
Q: Complete the blanks. When all unemployment is ________________ and ______________, the unemployment…
A: Unemployment means that people are not working but they are searching for a job. It means the people…
Q: You WIN money if you leave with more money than you started with. You LOSE money if you leave with…
A: Probability refers to the study that incorporates numerical descriptions on the likelihood of an…
Q: Which of the following is the most accurate statement regarding the problem with using life…
A: Life expectancy is one of the economic measures that is used to analyze the health of the people of…
Q: In the Aggregate Expenditure framework, which of the following government policy choices offer a…
A: In economics, aggregate spending (AE) is employed to measure national revenue. Aggregate expenditure…
Q: For the purpose of calculating GDP, investment is spending on a. stocks, bonds, and other…
A: GDP is defined as the total production of all goods and services within territory of the country in…
Q: What is transport policy and explain why it is important to a country.
A: The process of regulating and controlling the provision of transportation in order to facilitate the…
Q: A factory makes bicycle tires. The cost, C, in dollars and revenuue in dollars, R, are both…
A: Given that, R=R(n), Revenue earned by selling 'n' tires. C=C(n), the total cost of production of 'n'…
Q: pose that for every open-market operation in the amount of $1, money supply increases by $3, i.e.,…
A: Money supply includes all the currency in form of cash and coins , also balances in the bank…
Q: Question 38 If you go to the bank and notice that a dollar buys more Ghanaian cedis than it used to,…
A: A strong dollar is one that can buy more than its counterpart in another Ghanaian currency.
Q: . If aggregate demand shifts right, what is equilibrium output? d. if aggregate demand shifts left,…
A: The curve that depicts various quantities of goods and services being demanded at various levels of…
Q: According to the figure below, Rightward AS shifts cuse leftward Philips curve shifts PC. PC, 6. 1.…
A: Given Philips curve 1 and PC2
Q: Mary bought her cosmetic products during a sale (18% off) at a well-known supermarket. She paid P493…
A: Answer :- Given data - Mary bought her cosmetic products during a sale -- 18% off She paid…
Q: QUESTION 6: 1 POINT Marginal Utility per Dollar |Quantity of Total Marginal Product A Utility…
A: Answer: Formula of marginal utility per dollar:Marginal utility per dollar=marginal utility of a…
Q: In what way are the factors used to calculate the current account balance similar to each other?…
A:
Q: A policy implication of the downward-sloping Phillips curve is that it is possible to both…
A: Full employment refers to the situation where the potential GDP is equal to the real GDP. It means…
Q: Using the three-equation New Consensus model, describe how zero output-gap can be achieved using…
A: (Q) Using the three-equation New Consensus model, describe how zero output-gap can be achieved using…
Step by step
Solved in 2 steps with 7 images
- Bluth’s preferences for paper and houses can be expressed as Ub(p, h) = 2pb + hb, while Scott’s preferences can be expressed as Us(p, h) = ps + 2bs. Bluth begins with no paper and 10 houses, whereas Scott begins with 10 units of paper and no houses. 1. Is the starting endowment Pareto efficient? Justify your answer using an Edgeworth box? Determine whether each of the following price pairs is consistent with a competitive equilibrium. If yes, determine the resulting allocation of goods, sketching that equi- librium in your Edgeworth box. If not, explain why not (for what good is there a shortage, for what good is there a surplus?) pp =$3 and ph =$1 along with pp =$1 and ph =$1 Assume that the price of houses is $1. Given that price, determine the highest price pp that is consistent with a competitive equilibrium.Dear tutor, please solve these True/False Questions. Thank You! 1. Any point on the contract curve is Pareto efficient regardless of the initial endowment. 2. When two people trade their initial endowments to a point on the contract curve, only the level of the endowments will determine the new allocation.Suppose that there is an isolated market economy with just one good: money. The market has 1,000 partici- pants and the total value of money is $1 billion. Consider the following allocations. (a) Every participant has $1 million. (b) One person has $2 million, and everyone else has $500,000 (c) One person has $1 billion, everyone else has $0. Which of the above allocations are Pareto optimal and which are not? Why?
- Consider, U1(x1, y1) = 2(x1y1) 4 + 20 U2(x2, y2) = 10lnx2 + 4lny2 W1 = (2, 1) and W2 = (1, 2) 1.1 Characterize the Pareto efficient allocations and contract curve. 1.2 Which allocations are in the core? 1.3 Find the Competitive/Walrasian equilibrium for this problem. 1.4 Is the answer of 1.3 in the core?An exchange economy consists of two individuals and two goods. The two individuals have the following Leontief utility functions: Person 1: U1(x1, y1) = 3x1 + y1 Person 2: U2(x2, y2) = x2 + 2y2 Person 1 has an endowment of e1 = (3, 2). Person 2’s endowment is e1 = (3, 4). In an Edgeworth Box diagram, show which allocations are in the core. Describe the set of Pareto optimal allocations (i.e. the contract curve) in the Edgeworth Box. Illustrate the contract curve in an Edgeworth Box diagram. Let good y be the numeraire (i.e. set py = 1 and let px = p). What price ratio(s) P* will support a competitive equilibrium allocation for this economy?In this problem, we want to think about the difficulties that governments face in agreeing to significantly reduce CO2 emissions in order to control climate change. In the context of climate change, what phenomenon does China’s utility function capture? What does this exercise tell us about the limitations of the first welfare theorem? What do you think is an important aspect of trade in reality which is not captured by this model? Provide detailed analysis
- Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. Students in group A are given food (F) when they walk in, and students in group B are given a drink (D). Refer to Scenario 1. Suppose they have very different preferences where food and drink provide utility. For group A, U = FαDβ. For group B, U = min{F,D}. The contract curve in the Edgeworth box using a representative from each group would be (a) a right angle connecting the lower left corner with the upper right corner.(b) a curve (not necessarily a line) connecting the lower left corner with the upper right corner. (c) a line connecting the lower left corner with the upper right corner.(d) a right angle connecting the upper left corner with the lower right corner.Answer the questions based on the model given in the image: a. What is the set of Pareto optimal outcomes in this economy? Justify your answer. b. What is the competitive equilibrium in this economy assuming price of good 1 is set to 1. Specify whether the competitive equilibrium is pareto optimal. c. Now consider another economy where everything is as before, apart from individual 2’s preferences, which are as follows: among any two any bundles consisting of X and Y, individual 2 prefers the bundle which has a larger amount of commodity X irrespectiveof the amount of commodity Y in the two bundles, and between any two bundles with the same amount of X, she prefers the one with a larger amount of Y. (not sure but these are perhaps lexicographic preferences) Find the set of Pareto optimal outcomes in this economy.1. Consider allocations b-f (meaning points a, b, and f). Which allocations(s) A. are better for Ross than “a” (ignoring Rosa)? B. are better for Rosa than “a” (ignoring Ross)? C. are worse for both Ross and Rosa than “a”? D. are better for both Ross and Rosa than “a”? E. are Pareto superior to “a”?
- Consider a two-good exchange economy with two types of consumers. Type A have the utility function And an endowment of 3 units of good 1 and k units of good 2. Type B has the utility function And an endowment of 6 units of good 1 and 21 - k units of good 2. a. Find the competitive equilibrium outcome and show that the equilibrium price p* = p1/p2 of good 1 in terms of good 2 is p* = 21+k/15. b. Find the income levels (MA; MB) of both types in equilibrium as a function of k. c. Suppose that the government can make a lump-sum transfer of good 2, but it is impossible to transfer good 1. Use your answer to part b to describe the set of income distributions attainable through such transfers. Draw this in a diagram. d. Suppose that the government can affect the initial distribution of resources by varying k. Find the optimal distribution of income if (i) the SWF is W = log(MA) + log(MB) and (ii) W = MA + MB.Consider 2 - person ( A and B ) and 2 good ( x , y ) economy . A 's endowment is ( 0 , 1 ) while B 's endowment is ( 0 , 2 ) . B considers x and y to be perfect substitutes while A lexicographically prefers x to y. The competitive equilibrium allocation for this economy is ( a ) A gets ( 0 , 1 ) and B gets ( 2 , 0 ) ( b ) A gets ( 2 , 0 ) and B gets ( 0 , 1 ) ( c ) A gets ( 1.5 , 0 ) and B gets ( 0.5 , 1 ) ( d ) A gets ( 1 , 0 ) and B gets ( 1 , 1 )Take as a point of departure the following initial conditions: thereexists the unstable market equilibrium at $4 price; the DD curve has coordinates (7,0) and (0,7); the SS curve has coordinates (0,-1) and (7,7). 1. Explain what changes in structural variables could lead to the larger quantities demanded and supplied while the equilibrium price stays at $4. Draw the relevant supply-demand diagram, which furnishes the coordinates of the DD and SS curves at the $4 price.?