Consider a two-person (1 and 2) two good (X and Y) exchange economy. The marginal rate...

Consider a two-person (1 and 2) two good (X and Y) exchange economy. The marginal rate of substitution (of good X in terms of good Y) utility function of person i

Person 1: MRS₁ = 2y₁ /x₁

Person 2: MRS₂ = y₂ /(5x₂)

where x_i and y_i denote respectively person i's the consumption amount of good X and good Y, i=1, 2.

Their endowments are given in the following table

_{Endowment of X Endowment of
Y}

_{Person 1
10
            26}

_{Person
2
28
            26}

What is the equilibrium relative price of good X assuming "perfect competition"?

Expert Solution

Rahul Sunny answered 2 years ago

Consider an exchange economy with two individuals, A and B, and two goods, x and y....

Consider an exchange economy with two individuals, A and B, and two goods, x and y. Individual A has utility function UA(xA; yA) = xAyA, and individual B has utility function UB(xB; yB) = xByB. If there are 10 units of x and 10 units of y in the market, what is the equation of the contract curve? Group of answer choices yA = 0.5xA yA = 2xA yA = 5xA yA = xA

Consider a pure exchange economy with 2 goods and 3 agents. Good y is the numeraire,...

Consider a pure exchange economy with 2 goods and 3 agents. Good y is the numeraire, so we set py = 1. • Mr. 1 is Cobb-Douglas of type λ = 0.25 and is endowed with (10, 4). • Mr. 2 is Cobb-Douglas of type λ = 0.5 and is endowed with (5, 9). • Mr. 3 is Cobb-Douglas of type λ = 0.75 and is endowed with (20, 20). In the following steps, you will find the equilibrium of...

Consider an exchange economy with two agents, A, B, and two goods, x, y. A's endowment is...

Consider an exchange economy with two agents, A, B, and two goods, x, y. A's endowment is x = 6, y = 4, and B's endowment is x = 4, y = 6. (a) Suppose that A has utility function u(x, y) = x + y and B has utility function u(x, y) = xy. Find a competitive equilibrium allocation (CEA) and associated equilibrium prices. What difference would it make if A's endowment is x = 3, y = 1, and B's endowment...

3. Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two...

3. Consider a pure exchange economy with two goods, wine (x) and cheese (y) and two con- sumers, A and B. Let cheese be the numeraire good with price of $1. Consumer A’s utility function is UA(x,y) = xy and B’s utility function is UB(x,y) = min[x,y]. A has an initial allocation of 10 x and no y, and B has an initial allocation of 10 units of y and no x. (a) Put wine x on the horizontal axis...

4: There is an exchange economy with two agents, A, B, and two goods, x, y....

4: There is an exchange economy with two agents, A, B, and two goods, x, y. A's endowment is x = 6, y = 4, and B's endowment is x = 4, y = 6. (a) A has the utility function u(x, y) = x + y and B u(x, y) = xy. Find a competitive equilibrium allocation (CEA) and associated equilibrium prices. What difference would it make if A's endowment is x = 3, y = 1, and B's...

1. Consider the production possibility frontier for a simple two-good (closed) economy. Quantities of good x...

1. Consider the production possibility frontier for a simple two-good (closed) economy. Quantities of good x produced are plotted on the horizontal axis. Quantities of good y produced are plotted on the vertical axis. Suppose that the production of both x and y depends only on labor input and that the production functions for these goods are: x = f(lx) = lx and y = f(ly) = ly. Total labor supply is limited by: lx + ly = 100. The...

Given the following marginal utility schedule for good X and good Y for an individual A,...

Given the following marginal utility schedule for good X and good Y for an individual A, given that the price of X and the price of Y are both $10, and that the individual spends all his income of $70 on X and Y, Q x 1 2 3 4 5 6 7 MUX 15 11 9 6 4 3 1 Q y 6 5 4 3 2 1 0 MUY 12 9 8 6 5 2 1 1. Provide...

1. In the utility function U(x,y)=x^5y^2 does Y exhibit diminishing marginal rate of substitution? Please show...

1. In the utility function U(x,y)=x^5y^2 does Y exhibit diminishing marginal rate of substitution? Please show your work. 2.What is the no-waste condition for the utility function U(x,y)=min{x/3,y/5} express your answer in terms of y as a function of x 3. What is the MRS of the utility function U(x,y)=3x+1/2y? please show your work

Consider the following five utility functions. G(x,y) = (x)1/2 + y H(x,y) = (x+1)1/2 + y...

Consider the following five utility functions. G(x,y) = (x)1/2 + y H(x,y) = (x+1)1/2 + y + 1 L(x,y) = ln(x) + y U(x,y) = x ey W(x,y) = 100 x - 4x2 + 3 y Z(x,y) = -(100 - x)2 -3 (y-200)2 Which function or functions represent the same preferences as U? a.G b.U c.None. d.W e.Z f.L g.H

Consider an economy in which an individual (A) is consuming two goods (X and Y). The...

Consider an economy in which an individual (A) is consuming two goods (X and Y). The government is considering two alternative taxation policies: (a) taxing good X; (b) putting a lump- sum tax on A. By using a graphical analysis, compare these two taxation policies in terms of “excess burden”.

Question