B. y6 Consider an exchange economy with two individuals, a and b, and two goods, x and y. Individual a has utility function Uª(x,y) = x²y, and individual b has utility function U*(x,y) = 3x+4y. What condition will hold at all Pareto efficient allocations in the interior of the Edgeworth box? %3D A. ***8ya = 3xa 3 C. 8yb = 3xb D. y° = 2x°

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 the Hecksher-Ohlin model. Let the total endowment of capital in Home and Foreign be 30 and 20 units, respectively. Let the total endowment of labour in Home and Foreign be 20 and 10 units, respectively. Which of the statement below is true? A. If there is trade, Foreign will export the labour intensive good B. Home is capital-abundant C. Foreign is labour-abundant D. Home has comparative advantage in the labour intensive good E. There's insufficient information to discuss comparative advantage

In an exchange economy there are two people (A and B), and two goods ( and ). Their respective utility functions and endowments are: , ; . What is the minimum possible amounts of  in the core? Round your answer to 2 decimal points.

Consider the possibility that government spending increases produc- tivity so that with lump sum taxes after an increase in government spending the original equilibrium level of consumption and leisure is still just affordable. (That is this point lies on the frontier of both the before and after PPFs. Be careful to make sure your drawing has this very unusual feature.) How will an increase in government spending affect consumption, hours worked, output and welfare?

Consider a two-person exchange economy in which person 1 owns 200 units of x and 100 units of y while person 2 owns 100 units of x and 200 units y. Suppose their preferences over the two goods can be represented as: U1 (x, y) = y + 50Inx U2 (x, y) = y + 150lnx 1. How much of x do they trade among each other?  2. Does the First Welfare Theorem (FWT) hold in this economy?

Suppose countries A and B produce and consume (assuming convex preferences) apples and bananas using only labour. Unit labour cost for apples in country A are 2 and 1 in country B. Unit labour cost for bananas are 5 in country A and 4 in country B. The labour force is the same in both countries, and given by 100 in each country. Which three of the following statements are true?       Each country has an absolute advantage.     Allowing for international trade, the production of 100 apples and 20 bananas can occur in a global market equilibrium, but not in a market equilibria under autarky.     Country A will produce apples, with or without international trade.     Under autarky, the relative price for apples (price for apples/price for bananas) equals 0.4 in country A and 0.25 in country B.     Country B has an absolute advantage in producing bananas.     Allowing for international trade, the production of 60 apples and 40 bananas is feasible, but…

Consider the two-period model in partialequilibrium, i.e. the endowment economy. Assume that there is a decrease in technology such that the endowment in the first period decreases (relative to standard level, say) but the endowment in the future remains unaffected. Explain graphically and in words the effects of this change on the optimal intertemporal allocation of consumption, assuming that without the endowment change the consumer would have been a lender in the first period. Explain the effects of this change on the intertemporal prices,  Disentangle the effects of the overall change in endowment between income and substitution effects.

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

Consider a simple economy consisting of two countries, England and France. England has 25 workers and France has 75 workers. England can produce 4 units of grain and 2 units of cloth with each unit of labor. France can produce 1 unit of grain and 1 unit of cloth with each unit of labor. Wages per unit of labor are the same in both countries.  c. Assume that consumers have utility ?=?????^(1/2) ⋅????ℎ^(1/2). How much does each country produce and consume of each good in autarky? Show the consumption graphically by drawing the indifference curves into your two diagrams. d. Now allow for trade. How much does each country produce and consume of each good in this case? Draw the new production possibilities frontier, indifference curves, and equilibrium point into your two diagrams, and indicate exports and imports. e. What is the utility of consumers in each country under free trade? How much does utility change relative to autarky?