Question
In: Economics
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 that the consumer and producer are price-takers.
Discuss how the decentralised decision making is coordinated in this economy and derive the analytical condition that results in a Pareto-efficient exchange.
Solutions
Rahul Sunny answered 2 years agoRelated 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 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.*
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.
(1) What is the market economy? How do the financial markets interact with product and labor...
(1) What is the market economy? How do the financial markets
interact with product and labor markets to allocate scarce
resources efficiently in the market economy?
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.
Graph the market for an urban labor market for the city of Economica. Assume labor markets...
Graph the market for an urban labor market for the city of
Economica. Assume labor markets are clear.
a) Suppose the local government imposes a tax on business. Graph
the effect.
b) Suppose the local government uses the tax to open a series of
new museums. How might this affect the labor market? Graph the
effect.
Assume that a monopolist is able to sell rocks in two separate markets, market A and...
Assume that a monopolist is able to sell rocks in two separate
markets, market A and market B. Assume that there is no trade
between these markets. Assume that the monopolist has a constant
marginal cost of $10. Assume that the demand curve for rocks in
market A is as follows: P=200-Q
Assume that the demand curve for rocks in market B is as
follows: P=100-2Q
1. In order to maximize profits, what price will the monopolist
charge in each...
Assume that the only source of systematic risk in the economy is the market risk. Consider...
Assume that the only source of systematic risk in the economy is
the market risk. Consider a portfolio (P) with the following
characteristics (which were measured over a certain timeperiod T):
mean or expected annual return (µp) = 100%, standard deviation of
annual portfolio returns (σp) = 25% and a beta relative to the
market (βp) = −1. During the same time-period T, the market index
(M) had the following characteristics: mean or expected annual
return (µm) = 33% and...
Let us assume a neoclassical economy with two factors of production: Capital and Labor. ?=??! "?
Let us assume a neoclassical economy with two factors of
production: Capital and Labor. ?=??! "?
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