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What is the welfare criterion in an exchange model
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- In a hunter-gatherer society lives 2 people, Adam and Smith. Adam picks 10 bananas a week.Smith gathers 50 wildberries a week. Both Adam and Smith enjoy eating bananas and wildberries and have product utility function. The equilibrium exchange rate is "1 banana = ??? berries"Assume the situation of an exchange economy. (a) Determine the contract curve as an expression in which good I (x1) is a function of good 2 (x2). (b) Provide a diagram that illustrates the contract curve and the core of the economy. (c) Determine the Walrasian equilibrium prices.Provide general formulations of the First and Second Welfare Theorems for an exchange economy and, using the specific exchange economy of this section, illustrate the theorems in a diagram.
- Characterize a competitive equilibrium for an exchange economy. Provide conditions under which an equilibrium exists for the case where the commodity space has dimension 2 and demonstrate a proof using those conditions.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 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. A. What are the conditions for Pareto efficiency in an exchange economy? B. Are these consumption levels economically efficient? C. Can these consumption allocations be observed in a perfectly competitive equilibrium in an exchange economy without production? Explain.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.
- What does Heckscher-Ohlin (H-O) model postulates? Which force does H-O identify as the fundamental determinant of comparative advantage and trade?For a two-person two goods exchange economy, provide a formal definition of a barter equilibrium and formally demonstrate that such allocations are in the core of the economy.Consider the two countries of Syria and UAE. A business man wants to do trade between the two countries. If Syria produces maximum of 2 million kilograms of tomato and maximum of 4000 kilograms of Halwa, then draw the production possibility frontier What is the absolute value of the slope of this production possibility frontier? In the 2-factor, 2-good Heckscher-Ohlin model, why the two countries are different? What will happen when Syria's currency depreciates? What type of contract is he involved if he negotiates over the exchange rate for 30 days in future?
- Why exchange control is essential?China has a comparative advantage in textiles and an absolute advantage in both textiles and radios. Japan has a comparative advantage in radios. According to this scenario Group of answer choices Japan should export textiles and import radios. China should export both radios and textiles. China should export textiles and import radios. Japan should import both radios and textiles.The principle of comparative advantage suggests that, if New York and Florida exchange taxi parts for oranges, each state will be made worse off.