Consider a Robinson Crusoe economy with increasing returns to scale technology and the preference is such...

Consider a Robinson Crusoe economy with increasing returns to scale technology and the preference is such that coconut and leisure are perfect complements. Draw this economy on a diagram.

Find Pareto Optimal allocation.

Find competitive equilibrium.

*You can take reasonable parameters for your own.*

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Consider a Robinson Crusoe economy with increasing returns to scale technology and the preference is such...

Consider a Robinson Crusoe economy with increasing returns to scale technology and the preference is such that coconut and leisure are perfect complements. Draw this economy on a diagram.

Consider the “Robinson Crusoe” economy with two markets - product market and labor market. Assume the...

Consider the “Robinson Crusoe” economy with two markets - product market and labor market. Assume the utility function of the consumer is given by ? = ?(?, ?), where ? denotes consumption and ? stands for leisure, and the production technology is given by ? = ?(?), where ? is output and ? denotes labour input. Furthermore, assume the price of the consumer good to be equal to one, and the price of labour equal to wage rate, ?, and...

1.Consider a Robinson Crusoe economy. Robinson is a representative agent with utility function:u(c,r)=cr, where c is...

1.Consider a Robinson Crusoe economy. Robinson is a representative agent with utility function:u(c,r)=cr, where c is coconuts, and r is leisure. In order to produce coconuts, technology dictates the production, which is given by c=a√L where a is some constant, and L is labour. Suppose that a=4. Finally, there is a time constraint: r+L=18. Consider a competitive labour market. Given the wage rate, w=2.0, a firm would like to hire units of the labour input. (Answer just the number up...

Derive the Walras law for the Robinson Crusoe economy and discuss the policy implications of the...

Derive the Walras law for the Robinson Crusoe economy and discuss the policy implications of the law.

Consider an industry that produces differentiated products with increasing returns to scale.

Consider an industry that produces differentiated products with increasing returns to scale. The market structure is monopolistic competition. The firms in the industry have different productivities and different marginal cost. How would trade liberalization affect demand curve facing a firm? Would the change have the same effects on firms with different marginal cost? Why? Explain why international trade could improve the efficiency of the industry. In many countries, the exporting firms are more productive than firms which serve only...

Returns to Scale in Economy.

What do you understand by Returns to Scale in Economics? What do you unserstand by Economies of Large Scale Production? What are the categories of Economies of Large Scale Production? Define Internal Economies of Scale.

Returns to Scale in Economy.

What do you understand by External Economies of Scale? How do they become Diseconomies?

With appropriate examples, define increasing returns to scale, decreasing returns to scale and constant returns to...

With appropriate examples, define increasing returns to scale, decreasing returns to scale and constant returns to scale. (Please write out answer versus charting it)

1. Derive the equilibrium condition for a one-person Robinson Crusoe economy and prove that the same...

1. Derive the equilibrium condition for a one-person Robinson Crusoe economy and prove that the same result holds for a decentralized market economy with production and consumption sectors. Discuss the implications of the result for economic policy.

a) Do the following production functions exhibit constant returns to scale, increasing returns to scale, or...

a) Do the following production functions exhibit constant returns to scale, increasing returns to scale, or decreasing returns to scale? For full credit, show why. 1) Q= 10L^ 0.5K^0.3 2) Q= 10L^0.5K^0.5 3) Q= 10L^0.5K^0.7 4) Q= min{K, L} b) Which objects pin down a_LC and a_KC? Explain carefully. c) Why does labor being mobile across sectors automatically imply revenue maximization for firms? Explain carefully.

Subjects