Consider a 2-good, 2-agent pure exchange economy where the initial endowment is eA = (5, 5), eg = (5, 5) and preferences are represented by UA, UB: Ro UA (XA) = XA1XÁ2 and UB (XB) = x²₁x2. where Which 2 of the following 8 options are false: ********** For all ß [0, 1], the initial endowment is a Walrasian Equilibrium allocation. If ß < 1 then at prices p = (1,1) there will be excess demand of good 2 and excess supply of good 1. For all ß [0, 1], every Pareto efficient allocation can be supported as a Walrasian Equilibrium for some reallocation of resources. For any prices p (1, 1), the budget sets of both players leave the Edgeworth box. For all ß [0, 1], the bottom left and top right corners of the Edgeworth box (0A and Og) are both Pareto efficient.

Consider a 2-good, 2-agent pure exchange economy where the initial endowment is eA = (5, 5), eg = (5, 5) and preferences are represented by UA, UB: Ro UA (XA) = XA1XÁ2 and UB (XB) = x²₁x2. where Which 2 of the following 8 options are false: ********** For all ß [0, 1], the initial endowment is a Walrasian Equilibrium allocation. If ß < 1 then at prices p = (1,1) there will be excess demand of good 2 and excess supply of good 1. For all ß [0, 1], every Pareto efficient allocation can be supported as a Walrasian Equilibrium for some reallocation of resources. For any prices p (1, 1), the budget sets of both players leave the Edgeworth box. For all ß [0, 1], the bottom left and top right corners of the Edgeworth box (0A and Og) are both Pareto efficient.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

20. In the graph above, point E represents the autarkic equilibrium of a country in an endowment model. Both black and red curves are indifferences curves of consumers with identical homoethic preferences. If this country opens up to trade and world prices are given by the slope of the red line, then Question 20 options: a) this country will import clothing and export food b) this country will export clothing and import food c) there is no trade in the new equilibrium d) this counry will import and export clothing
Consider a pure exchange economy, where each consumer has preferences described by a Cobb-Douglas utility function. Both consumers have exactly the same endowment. In such an economy, an equitable distribution of goods (where each individual consumes exactly half of each good) is a Walrasian equilibrium allocation. a. always for any consumers' preferences b.only if consumers' preferences are exactly the same c. never d. non of the above
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?
Consider an exchange economy with 2 agents and 2 goods. In an Edgeworth-Bowley diagram, show and illustrate that if both agents have the same preferences, the contract curve is a straight line from the bottom left-hand corner to the top right-hand corner. Does it follow that if the agents do not have the same preferences, the contract curve is not a straight line? Suppose the two agents have the same endowments and the same preferences. Is mutually beneficial trade possible? Illustrate in an Edgeworth Bowley diagram. State and explain Walras Law. What are the implications of Walras’s Law? Illustrate Walras Law in an Edgeworth-Bowley diagram.
Consider an economy with 3 agents, Mohammed (M), David (D) and Susan (S). There are two goods available, good x, and good y. The marginal rates of substitution (where good x is on the horizontal axis and good y is on the vertical axis) are given by for Mohammed, for David and for Mohammed and David are both consuming twice as much of the good x than good y, while Susan is consuming equal amounts of x and y. A. What are the conditions for Pareto efficiency in an exchange economy? B. Are these consumption levels economically efficient? C. Can these consumption allocations be observed in a perfectly competitive equilibrium in an exchange economy without production? Explain.
Consider a pure exchange economy, where each consumer has preferences described by a Cobb-Douglas utility function. Both consumers have exactly the same endowment. In such an economy, an equitable distribution of goods (where each individual consumes exactly half of each good) is a Walrasian equilibrium allocation? a. always, for any consumers' preferences b. only if consumers' preferences are exactly the same c. Never d. None of the above
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.
State the first theorem of welfare economics of a production and exchange economy. Which conditions must be satisfied for the Pareto efficiency of an allocation of a production and exchange economy (assuming that all goods are used, produced and consumed in strictly positive quantities)? Discuss and explain
Give typing answer with explanation and conclusion Consider an exchange economy consisting of two people, A and B, endowed with two goods, 1 and 2. Person A is initially endowed with ωA = (0,10) and person B is initially endowed with ωB = (11,0). They have identical preferences, which are given by U^A(x1,x2) = U^B(x1,x2) = x1^2*x2. Suppose that p2 =1. Under the competitive equilibrium, what is p1? Round answers to two decimal places.
In an exchange economy, there are two people (Shadi and Nino) and two goods (x1 and x2). Their initial endowments are ωS = (2, 4) and ωN = (3, 6). Their utility is given by the following functions: US(x1,x2) = x12x23 and UN(x1,x2) = x1x24. Which of the following is the equation for the contract curve? Group of answer choices a. x2N = 96x1N / (15 + 4x1N) b. x2N = 47x1N / (8 + 4x1N) c. x2N = 91x1N / 5 d. x2N = 16x1N / (3 + x1N) e. x2N = 41x1N / (9 + x1N)
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?
D7) In a two good two consumer economy, utility functions are U1(x1,x2) =x1(x2)2 and U2(x1,x2) = (x1)2 x2 The endowments of the consumers are e1 =(10,0) and e2=(0,20). Find the allocation of goods in Walrasian equilibrium.