plogy represe by the production function y =VL where y denotes coconuts and L denotes hours of labour. His preferences can be represented by the utility function u coconuts and R leisure. Robinson has an endowment of 12 hours to spend per day where R+ L= 12. The Pareto efficient allocation for Robinson is L= (numeric) and y= marginal rate of substitution to the marginal product of labour and use the production function and resource constraint for labour and leisure). yR where y denotes (numeric, rounded to two decimals). (Hint: equate the Blank # 1 Blank # 2

plogy represe by the production function y =VL where y denotes coconuts and L denotes hours of labour. His preferences can be represented by the utility function u coconuts and R leisure. Robinson has an endowment of 12 hours to spend per day where R+ L= 12. The Pareto efficient allocation for Robinson is L= (numeric) and y= marginal rate of substitution to the marginal product of labour and use the production function and resource constraint for labour and leisure). yR where y denotes (numeric, rounded to two decimals). (Hint: equate the Blank # 1 Blank # 2

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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Ivan faces a labor supply decision. His well-behaved preferences over the two goods "hours of leisure' L and 'consumption' c can be represented by u= 4(L)1/2 +c. He has no non-labor income and can choose how many hours to work at the wage rate u per hour. The price per unit of consumption is p, and his available free time is T hours .a) Sketch Ivan's budget set, with axes, intercepts, and slope labeled (these will depend on the parameters w, p, and T) .b) Use the tangency method to find Ivan's demand functions for leisure and consumption (as functions of u, p. and T) .c) Let's think about Ivan's "time expansion path" (that is, the analog of the income expansion path a.k.a. income-consumption loci but for changes in T). Sketch it and explain why it has this shape. with reference to Ivan's demand functions.d) In terms of parameters from the model, what is the most that Ivan would be willing to pay to have an extra hour of free time (that is, to increase T by 1)? Why?
Ivan faces a labor supply decision. His well-behaved preferences over the two goods "hours of leisure' L and 'consumption' c can be represented by u= 4(L)1/2 +c. He has no non-labor income and can choose how many hours to work at the wage rate u per hour. The price per unit of consumption is p, and his available free time is T hours .a)Sketch Ivan's budget set, with axes, intercepts, and slope labeled (these will depend on the parameters w, p, and T) .b)Use the tangency method to find Ivan's demand functions for leisure and consumption (as functions of u, p. and T) .c) Let's think about Ivan's "time expansion path" (that is, the analog of the income expansion path a.k.a. income-consumption loci but for changes in T). Sketch it and explain why it has this shape. with reference to Ivan's demand functions.d) (3 points) In terms of parameters from the model, what is the most that Ivan would be willing to pay to have an extra hour of free time (that is, to increase T by 1)? Why?
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Consider an economy with 100 units of labor and capital that must be completely distributed to Firms X and Y. With this information, recommend an efficient allocation of the two inputs between the two firms. Discuss and show the necessary solution to support your recommendationX = KL2 – L3;Y = 10K1.5L0.5;Graphically illustrate and discuss how an economy can achieve production efficiency if at its current allocation on L and K, the MRTSLKY > MRTSLKZ (you may use your own values to represent the available L and K and the initial distribution)
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Joko is a university student, working part-time at copying service center for Rp. 8/hour with zero non-labor income. (a) Graph Joko’s budget constraint and label the utility-maximing outcome if Joko opts to work 40 hours per week. (b) Suppose Joko’s parents decide to send him Rp.100/week. Graph Joko’s new budget constraint. (c) How many hours will Joko now have to work to maintain the same weekly income as in (a)?
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