Question

In: Economics

Consider a society consisting of just a farmer and a tailor. The farmer has 30 units...

Consider a society consisting of just a farmer and a tailor. The farmer has 30 units of food but no clothing. The tailor has 60 units of clothing but no food. Suppose each has the utility function U=F^1/3C^2/3 . If the price of clothing is always $1, and the food price is currently $1, then we can conclude

Question 10 options:

the market is at a competitive equilibrium.

the price of food will drop towards a competitive equilibrium.

the price of food will increase towards a competitive equilibrium.

None of the above.

Solutions

Expert Solution


Related Solutions

Farmer S. Unkist has a fruit grove consisting of lemons, bananas, and watermelons along a straight...
Farmer S. Unkist has a fruit grove consisting of lemons, bananas, and watermelons along a straight moat. To prevent thieves from stealing his fruit while at the same time make sure the fruit do not mix before they are processed, he plans to fence in each fruit plot using identical rectangular enclosures. The side along the moat needs no fence because the moat is infested with man eating crocodiles as shown below. If he has 1200 yards of fence, what...
Consider a simple RL circuit consisting of an ideal battery with voltage 30 V , a...
Consider a simple RL circuit consisting of an ideal battery with voltage 30 V , a resistor of resistance 15 Ω, an inductor of inductance 7.0 H, and a switch all in series. The switch is initially open. a) Determine the ratio of the voltage across the resistor to the voltage across the inductor when the current has a value of 1.5 A. b) How much time has elapsed if the voltage across the resistor is 20 V ?
A farmer has just cleared a new field for corn. It is a unique plot of...
A farmer has just cleared a new field for corn. It is a unique plot of land in that a river runs along one side. The corn looks good in some areas of the field but not others. The farmer is not sure that harvesting the field is worth the expense. He has decided to harvest 10 plots and use this information to estimate the total yield. Based on this estimate, he will decide whether to harvest the remaining plots.
Consider an economy consisting of two economic agents, Fiona and Shrek. Fiona can make 5 units...
Consider an economy consisting of two economic agents, Fiona and Shrek. Fiona can make 5 units of food per day if she devotes all of her time to food production and 10 units of clothing if she does to clothing production. If she divides her time between the two production activities, her output of each good will be proportional to the time spent on each. The corresponding figures for Shrek are 10 units of food and 15 units of clothing....
(10 marks) A farmer has discovered that on his farm, he can get 30 bushels of...
A farmer has discovered that on his farm, he can get 30 bushels of corn per acre if he applies no fertilizer. When he applies N pounds of fertilizer to an acre of land, the marginal product of fertilizer is 1−N/200 bushels of corn per pound of fertilizer. (a) If the price of corn is $3 a bushel and the price of fertilizer is $p per pound (where p < 3), how many pounds of fertilizer should be use per...
A DI has assets of $30 million consisting of $7 million in cash and $23 million...
A DI has assets of $30 million consisting of $7 million in cash and $23 million in loans. It has core deposits of $20 million. It also has $5 million in subordinated debt and $5 million in equity. Increases in interest rates are expected to result in a net drain of $1 million in core deposits over the year. a-1. The average cost of deposits is 5 percent and the average yield on loans is 8 percent. The DI decides...
Consider a farmer and a rancher who operate near one another. The farmer grows crops and...
Consider a farmer and a rancher who operate near one another. The farmer grows crops and the rancher’s herd wanders and tramples the farmer’s crops. If the herd tramples the crops, it causes $400 per week worth of damage to the farmer. The rancher could put a fence around the herd to prevent damage to the crops, but the cost for the rancher to build and maintain the fence is $500 per week. The farmer could protect his crops with...
Tailor​ Johnson, a U.S. maker of fine​ menswear, has asubsidiary in Ethiopia. This​ year, the...
Tailor Johnson, a U.S. maker of fine menswear, has a subsidiary in Ethiopia. This year, the subsidiary reported and repatriated earnings before interest and taxes (EBIT) of 140 million Ethiopian birrs. The current exchange rate is 9.6046 birrs/dollar or S=$0.1041/birr.The Ethiopian tax rate on this activity is 21%. U.S. tax law requires Tailor Johnson to pay taxes on the Ethiopian earnings at the same rate as on profits earned in the United States, which is currently 39%.However, the United States...
Tailor​ Johnson, a U.S. maker of fine​ menswear, has a subsidiary in Ethiopia. This​ year, the...
Tailor​ Johnson, a U.S. maker of fine​ menswear, has a subsidiary in Ethiopia. This​ year, the subsidiary reported and repatriated earnings before interest and taxes​ (EBIT) of 195 million Ethiopian birrs. The current exchange rate is 9.8039 ​birrs/dollar or Upper S equals $ 0.1020 divided by birrS=$0.1020/birr. The Ethiopian tax rate on this activity is 27%. U.S. tax law requires Tailor Johnson to pay taxes on the Ethiopian earnings at the same rate as on profits earned in the United​...
You decide to invest in a portfolio consisting of 30 percent Stock A, 30 percent Stock...
You decide to invest in a portfolio consisting of 30 percent Stock A, 30 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock A Stock B Stock C Recession .17 - 18.8 % - 3.9 % - 22.8 % Normal .45 10.2 % 8.5 % 17.1 % Boom .38 28.6 % 15.8 % 31.7...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT