Two goods are produced in a two-person economy - good X and good Y. Person A's production possibilities frontier is given by the formula X+Y=A, while Person B's production possibilities frontier is 2X+Y=B (where A, B > 0 and A< B < 2A). The utility function of this two-person society is described by the formula U(X,Y)= XY2. The optimal consumption level in this economy is: A+B 3 2A+B 6 2(A+B) . a. X = and Y = X = and Y = b. X = and Y = A+B C. X = and Y = 3 d. With such data it is not possible to unambiguously determine the consumption level. 2A+B 6 or 3 2(2A+B) 3 2(2A+B) 3 2(A+B) 3 X

Two goods are produced in a two-person economy - good X and good Y. Person A's production possibilities frontier is given by the formula X+Y=A, while Person B's production possibilities frontier is 2X+Y=B (where A, B > 0 and A< B < 2A). The utility function of this two-person society is described by the formula U(X,Y)= XY2. The optimal consumption level in this economy is: A+B 3 2A+B 6 2(A+B) . a. X = and Y = X = and Y = b. X = and Y = A+B C. X = and Y = 3 d. With such data it is not possible to unambiguously determine the consumption level. 2A+B 6 or 3 2(2A+B) 3 2(2A+B) 3 2(A+B) 3 X

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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