General Equilibrium 2 The utility for consumer 1 and 2 are: U (x}, a²) = 10[(x})² + (x²)²]!/2 U2(x}, a²) = 8[(x})ª + (x3)*]!/4 2.1 Characterize the Pareto efficient allocation and contract curve. 2.2 Characterize the competitive equilibrium if Wi = (0,4) and W2 = (4,0).
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![General Equilibrium 2
The utility for consumer 1 and 2 are:
Un(퍼, af)=10[(z)2 + (27)21/2
Ua(a, ag) %3D 8[(x])4 + (교)11/4
2.1 Characterize the Pareto efficient allocation and contract curve.
2.2 Characterize the competitive equilibrium if W1 = (0,4) and W2 = (4,0).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdf35790b-f87a-4192-a232-afa929fb1bef%2F418e6ee6-1847-4bd5-b789-ed448f1ab09b%2Faoqgss_processed.jpeg&w=3840&q=75)
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- 6. Person 1 with preferences u(x, y) = y1 – 2x1 is endowed with x̂1 = 2 and ŷ1 = 40. Person 2 with preferences u(x, y) = x2– 2y2 is endowed with x̂2 = 20 and ŷ2 = 60. Be prepared to upload an Edgeworth Box Diagram that illustrates the Pareto Preferred Region, the Contract Curve and the Equilibrium. Calculate the Edgeworth Box equilibrium price level.Person A has a utility function of and person B has a utility function Agent A and agent B have identical endowments of (1/2,1/2). (a) Illustrate this situation in an Edgeworth box diagram. (b) What is the equilibrium relationship between p1and p2? (c) What is the equilibrium allocation?Use the Fundamental Theorem of Exchange and draw Edgeworth Box diagrams to show the conditions necessary for an 'efficient' allocation of two goods between two individuals. Use this model o evaluate the statement: "If two individuals have identical endowments of both goods there are no possible gains from trade". Hint: you need to develop your explanation of the theory and the efficiency conditions step-by-step. You need to draw several diagrams showing Edgeworth Box (rather than drawing one complicated crowded diagram).
- 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 themIf an allocation is Pareto optimal and if indifference curves between the two goods have no kinks, then (Select all that applies) Group of answer choices a. two consumers who consume both goods must have the same MRS between them, but consumers may consume the goods in different ratios. b. two consumers with the same income who consume both goods must have the same MRS, but if their incomes differ, their MRSs may differ. c. any two consumers who consume both goods must consume them in the same ratio. d. for any two consumers who consume both goods, neither will prefer the other consumer’s bundle to his own. e. all consumers receive the bundle that they prefer to any other bundle the economy could produce for them.Two 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.
- Come up with an example with four agents and four items in which there is only one Pareto efficient allocationTrue false question. 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?1.Suppose that Chris's utility function is given by UC=QC1/2 RC1/2 , where QC and RC are his consumption of Q and R, respectively. Dana's utility function is given by UD=QD1/3 RD2/3, where QD and RD are her consumption of Q and R, respectively. Write an equation for the marginal rate of substitution (MRS) between Q and R for each of the two agents. 2.Suppose that the price of good R is pR=1 and the price of good Q is pQ=2. How much is Chris's and Dana's initial income, given his endowments and given these prices? 3. At these prices, how many units of Q would Chris and Dana want to consume? 4. At these prices, how many units of R would Chris and Dana want to consume?
- Which is the correct answer ? Suppose there are 10 apples and 10 oranges in the economy. Joe is currently consuming 4 apples and 5 oranges, and Jane is consuming 6 apples and 5 oranges. At this allocation, Joe's marginal utility of apples is 3, and his marginal utility of oranges is 5. Jane's marginal utility of apples is 6, and her marginal utility of oranges is 10. The current price of apples is R4 per unit and the current price of oranges is R5 per unit. To reach a competitive equilibrium, the required price adjustment is: A. A decrease in the orange price relative to the apple price. B. A decrease in the apple price relative to the orange price. C. No change in the relative prices. D. An increase in both prices.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)Explain the statement true or false. Give an example of pay-off matrix to explain the solution. "It is possible to have a Pareto efficient allocation where someone is worse off than she is at an allocation that is not Pareto efficient"