Consider an exchange economy with two types of agents, A and B, and two goods, x and y. Preferences are given by UA(TA, YA) = xA + 10 ln(yA) and uB(xB, YB) = In(XBYB). Suppose the government wants to reach the goal of xB = 5 with the competitive equilibrium by setting a redistribution r such that wA = (10, r) and wB = (0, 20 – r). Let Py = 1. Find r reaches the government's goal. Round your answer to 2 decimal points. Answer:
Consider an exchange economy with two types of agents, A and B, and two goods, x and y. Preferences are given by UA(TA, YA) = xA + 10 ln(yA) and uB(xB, YB) = In(XBYB). Suppose the government wants to reach the goal of xB = 5 with the competitive equilibrium by setting a redistribution r such that wA = (10, r) and wB = (0, 20 – r). Let Py = 1. Find r reaches the government's goal. Round your answer to 2 decimal points. Answer:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider an exchange economy with two types of agents, A and B, and two goods, x and Y. Preferences are given by
UA (XA, YA) = XA + 10 ln(ya) and uB(xB, YB) = In(*BYB). Suppose the government wants to reach the goal of xB = 5
with the competitive equilibrium by setting a redistribution r such that wA = (10, r) and wB = (0, 20 – r). Let py = 1. Find
r reaches the government's goal. Round your answer to 2 decimal points.
Answer:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc3b6ca91-a2cc-4723-ba04-94fd27f1b09a%2F5f5bc008-deb1-4bb6-bbc4-08ce5532cfc3%2Fxslggn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider an exchange economy with two types of agents, A and B, and two goods, x and Y. Preferences are given by
UA (XA, YA) = XA + 10 ln(ya) and uB(xB, YB) = In(*BYB). Suppose the government wants to reach the goal of xB = 5
with the competitive equilibrium by setting a redistribution r such that wA = (10, r) and wB = (0, 20 – r). Let py = 1. Find
r reaches the government's goal. Round your answer to 2 decimal points.
Answer:
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