Question 2 Demonstrate, by way of example, and explain fully, taking noting of the underlying assumptions, how you would derive Hicksian and Marshallian demand functions. What are the differences between these?
Q: 3. Consider an Edgeworth box economy in which the consumers have the Leontief utility func- tions…
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Q: Adam's utility function is UA(r, y) wA = (12, 12). Bob's utility function is U" (x, y) = 2r+3y and…
A: Price of good x = Px Price of good y = Py wxA= 12, wyA= 12, wxB= 12, and wyB= 12 Adam’s utility…
Q: 2(a) Suppose x is a Pareto efficient allocation in which each agent holds a positive amount of each…
A: MRS(x1; x2) = p1=p2, as all agents face the same prices, they adjust their consumption to maintain…
Q: Consider, U1(x1, y1) = 2(x1y1) 4 + 20 U2(x2, y2) = 10lnx2 + 4lny2 W1 = (2, 1) and W2 = (1, 2)…
A: Given information U1(X1Y1)=2(X1Y1) 4 +20 U2(X2Y2)=10lnX2+4lnY2 Initial endowment W1 =(2,1) W2=(1,2)
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A: Pareto condition is reached where no one can be made better off without making other worse off.
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A: As per the honor code, we are allowed to attempt only first three sub-parts of the question. If you…
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Q: 8. Example: Consider again the Edgeworth box economy in Question 7. Can the allocation (x",2) =…
A: Yes transfer is possible at price equilibrium allocation. Then the price will be ...
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A: We are going to find the Pareto efficient allocation bundle first to answer this question.
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Q: Adam's utility function is UA(r, y) (12, 12). Bob's utility function is U"(r.y)= 2r+3y and his…
A: Adam’s demand function for x and y; At equilibrium;…
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A: The compensated demand curve is a demand curve that only considers the substitution effect of a…
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Q: Duality (Part 2) [Answers a, b & c Provided by Bartley Expert] Let u(x.y)=(x+2)y. Find the following…
A: Dear Student as per policies and guidelines of bartleby, we are allowed to attempt only 3-subparts…
Q: 51 and 5p.+3p, 151 5p, +3p, Suppose the Marshallian demands for goods X and Y are given as x* =…
A: Given indirect utility function :-
Q: Consider an economy with 2 goods and 30 agents. There are 10 agents y3 each with the indirect…
A: U×PX,Yy,M= maxUx,yPxx+Pyy≤M=Ux*,y*=UDxPx,Py,M,DyPx,Py,M
Q: 2(a) Suppose x is a Pareto efficient allocation in which each agent holds a positive amount of each…
A: MRS(x1; x2) = p1=p2, as all agents face the same prices, they adjust their consumption to maintain…
Q: 4) Consider a two agent and two good exchange economy where agent 1 has preferences represented by…
A: This is related to second theorem of welfare economics which says that every pareto optimal…
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A: Hi, thanks for the question. As per the guidelines, we are allowed to answer only the first three…
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A: The option is(D).
Q: In the Walrasian world, Pareto optimal allocations are crucial in establishing an equilibrium…
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Q: If all markets are perfectly competitive, and general equilibrium prices hold in every market in an…
A: A perfectly competitive market is the market structure where there are large number of buyers and…
Q: 5. Consider an Edgeworth box economy where preferences are given by u'lat,x) = x}x and uai,3) = x,…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: Q2. "Since all market allocations are Pareto efficient there can be no justification for any kind of…
A: " Since all market allocations are Pareto efficient there can be no justification for any kind of…
Q: A has utility function u4(x4) = xf + x and initial endowment w4 B has utility function u3 (xB) = xf…
A: Pareto efficient allocation refers to the point in exchange economy moving away from which nobody…
Q: Consider the following utility function: X2 if: 1 2 u(x1, x2) if: 1< x2 < 2 x2 + x1 otherwise Answer…
A: Utility function is the function which represents the combination of number of goods which consumer…
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A: Answer -
Q: Consider a two-agents, two goods economy, in which both agents, A and B, are represented by the…
A: Ua ( x1 , x2 ) = x12 x2 Ub (y1 , y2 ) = y1 y22 Set of pareto optimal allocations is called the…
Q: Consider an Edgeworth box economy endowed with one unit of capital and two units of labor. If the…
A: For good X: MRTS = 1 dFdKdFdL= 1 For food Y : K=L
Q: A consumer has utility function U(21, 2) =4 +8 where z and zz are the two goods. Market prices are…
A: Since you have posted multiple questions, we will answer the first question for you. If you want any…
Q: General Equilibrium 1 Consider, U1(21, y1) = 2(x11)* + 20 U2(2, Y2) = 10lnx2 + 4lny2 W1 (2, 1) and…
A: Given information U1(X1Y1)=2(X1Y1)4+20 U2(X2Y2)=10lnX2+4lnY2 Initial endowment W1 =(2,1) W2=(1,2)
Q: Graphically, producer surplus is measured as the area Multiple Choice O о O under the demand curve…
A: Producer surplus is the difference between the price a consumer is willing to pay and the…
Q: 1. Consider allocations b-f (meaning points a, b, and f). Which allocations(s A. are better for Ross…
A: Note:- As per Bartleby guidelines, I am providing you with the answers to the first three subparts.…
Q: In an exchange economy, there are two agents, A and B, and there are 90 total units of x and 22…
A: Introduction: An exchange is a commercial center where protections, wares, subsidiaries, and other…
Question 2
Demonstrate, by way of example, and explain fully, taking noting of the underlying assumptions, how you would derive Hicksian and Marshallian
Question 3
In the Walrasian world, Pareto optimal allocations are crucial in establishing an equilibrium outcome with respect to welfare. Give an exposition of the two Welfare Theorems, demonstrating also that they are Pareto efficient
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- Consider an Edgeworth box economy, where preferences and endowments are given by. ( attached below ) In the following, use the normalization p2 = 1.(a) Find all the Pareto optimal allocations (use x1 to parameterize thePO allocations). (b) Suppose the government wants individual 1 to have the bundle x1 = (5, 9). Show whether the government can induce this outcome an equilib- rium with transfers. Find the supporting prices and transfers if possible. (c) State the Second Fundamental Theorem of Welfare and explain how the result in part (b) relates to that theorem. (d) Suppose the government does not care what bundle individual 1 gets and only wants to ensure that the individual 1 receives utility level equal to 45. Show whether this can be achieved as an equilibrium with transfers. Find the supporting prices and transfers if possible.Suppose that the initial allocation is point a between Ross and Rosa. A. Discuss how Ross’s condition be made better off without harming Rosa (i.e., Rosa maintains her level of utility). B. Illustrate this in a separate diagram and label point/s as necessary (also, if other point/s will have to be made or incorporated).Consider the production problem discussed in class in which 24 labor hours and 4 machinehours are to be allocated between food (x) production and wine (y) production. Suppose theproduction functions for x and y are as follows:Also, suppose the preferences of the agents are given by:Finally, suppose the MRT is given bywhere x and y denote, respectively, the aggregate quantities of food and wine produced.For each of the following allocations, determine whether they are (i) feasible and (ii) Paretoefficient. If they are inefficient, explain intuitively how it is possible to make someone betteroff without making the other person worse-off.a. ((14,2),(10,2),(5,10),(23,18))b. ((8,2),(16,2),(5,14),(11,18))c. ((14,2),(10,2),(14,21),(14,7))
- Heterogeneity in an endowment economy Suppose we have two typesof households: A and B. The utility maximization problem for a consumerof type i is max InCi,t+β ln Ci,t+1 Ct,Ct+1subject to Ci,t +Ci,t+1/ 1 + rt = Yi,t + Yi,t+1 / 1 + rt Note that the A and B households have the same discount rate and the same utility function. The only thing that is possibly different is their endowments. 1, Write down the Euler equation for households A and B.A consumer’s preferences over two goods x and y are given bythe utility function U(x, y) = xαyβ with α, β > 0. The prices of the goods are px = 2 and py = 4.The consumer has an income of I > 0.(a) For what values of α and β are these utility functions strictly monotone?(b) For what values of α and β will the consumer demand (i.e., Walrasian demand) be more x than y?(c) For what values of α and β are these goods gross substitutes? For what values of α and β are these goods gross complements? Provide a justification for your answer.a) Suppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4. Suppose 60 TL tax is imposed on each unit of X that is purchased. What is the burden of the tax? Explain the key factors that determine the incidence of the tax. b) Describe the main differences between partial and general equilibrium analysis in the context of examining tax incidence.
- Suppose X = R k + for some k ≥ 2, and we define x = (x1 , …, xk ) ≥ = (y1 , …, yk ) if x ≥ y; that is, if for each i = 1, …, k, xi ≥ yi . (This is known as the Pareto ordering on R k + ; it plays an important role in the context of social choice theory in Chapter 8.) (a) Show that ≥ is transitive but not complete. (b) Characterize ≥ Is asymmetric? Is≥ Negatively transitive? Prove your assertions. (c) Characterize ~ defined from ≥ in the usual fashion; that is, x ~ y if x ≥ y and y x. Is ~ reflexive? Symmetric? Transitive? Prove your assertions.True/false, no need to explain. (a) There is no perfect way to aggregate individual preferences to a single "social" preferences (b) “Before enacting a policy, try to put ourself in the shoes of those who will be negatively impacted mostly.” This sentence is best to summarise the Benthamite welfare function (c) If a person's utility is simply a function of her own consumption, and the welfare function is derived from individuals utility function, then we will not have consumption externalities. (d) An allocation cannot be both equitable and Pareto efficient.The analysis of taxation in the single-consumer economy used labor as an untaxed numeraire. Show that the optimal allocation with commodity taxation is unchanged when the consumption good becomes the untaxed nume´raire. Then establish that it does not matter which good is nume´raire and which is taxed.
- 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.Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the most liberal Democrat suggests an increase to Food Stamp (SNAP) allotments. Suppose the most conservative Republican suggests an increase in defense spending. The Republican says that, on average, military spending does the most good, so more is better. The Democrat is arguing that the extra food purchased by the extra spending will increase well-being the most. What is going on here? A . Both are employing marginal analysis, just from different perspectives. B. Only the Democrat is using marginal analysis. C. Only the Republican is using marginal analysis. D. Neither are using marginal analysis.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 Suzan. 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. (image of functions and equations attached) A. What are the conditions for Pareto efficiency in an exchange economy? Are these consumption levels economically efficient? B. Can these consumption allocations be observed in a perfectly competitive equilibrium in an exchange economy without production? Explain.