Question
In: Economics
1. Suppose you live in a two-good world (let's call it good 1 and good 2),...
1. Suppose you live in a two-good world (let's call it good 1 and good 2), and those goods are complementary. a. Make sure you can do this without checking your notes or textbooks: Derive your demand curve for good 1 graphically. b. On a different graph, draw the price-offer curve for good 1. c. Draw the income-offer curve. 2. Now suppose you have your preference
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Suppose you have a world with two goods, A and B. Suppose the price of good...
Suppose you have a world with two goods, A and B. Suppose the
price of good B increases and good A is an inferior good. Explain,
using concepts of income effect and substitution effect, how do you
know that consumption of good A will increase. Suppose A was a
normal good. Would consumption of A increase or decrease.
Peta and Dudley live in a two-person, two-commodity world. Quantities of the first good are denoted...
Peta and Dudley live in a
two-person, two-commodity world. Quantities of the first good are
denoted by x while quantities of the second commodity are
denoted by y. Peta’s preferences can be represented by the
utility function uP(x,y)
= x y and Dudley’s are represented by the utility function
uD(x,y)
= min{x,y}. Peta is initially endowed with 3 units of commodity
1 and 4 units of commodity 2 while Dudley is initially endowed with
7 units of commodity 1 and...
Suppose we live in a country that produces two goods.The first good is a composite of...
Suppose we live in a country that produces two goods.The first
good is a composite of everything people need and want (e.g.,water,
food, shelter, clothing, technology, transportation,
education,news, entertainment, public safety, and other services).
The second good is healthcare and every thing related to it. Use
the PPF tool and the concept of technical and allocative efficiency
to determineand discuss where this country stands in the production
of health- related goods and services.Use some real- world data
(e.g., gross domestic...
Suppose you are modeling a two country, two good world within the H-O framework where the...
Suppose you are modeling a two country, two good world within
the H-O framework where the two countries are the United States and
Canada and the two goods are computers and lumber. Further assume
that the United States is capital abundant, and computers are
capital-intensive. Using the three theorems of the H-O model,
explain in words and appropriate diagrams/equations what happens in
BOTH the United States and Canada when trade is allowed.
Good 1 and Good 2 are perfect substitutes. Suppose that good 1 is an ordinary good....
Good 1 and Good 2 are perfect substitutes. Suppose that good 1
is an ordinary good.
a. Should both good 1 and good 2 be normal goods?
b. Should good 2 be an ordinary good?
Explain using income effects and/or substitution effects.
Good 1 and Good 2 are perfect substitutes. Suppose that good 1 is an ordinary good....
Good 1 and Good 2 are perfect substitutes. Suppose that good 1
is an ordinary good.
a. Should both good 1 and good 2 be normal goods? Explain.
b. Should good 2 be an ordinary good? Explain.
Suppose there are only two countries in our world – Zooland (we can call it ‘Z’...
Suppose there are only two countries in our world – Zooland (we
can call it ‘Z’ for short) and Ecotopia (we can call it ‘E’ for
short). Zooland and Ecotopia both have the ability to produce two
goods, widgets and sandals. In a year Zooland can produce 100
widgets OR 500 sandals while Ecotopia can produce either 150
widgets OR 400 sandals.
Draw the Production Possibility Curves which represents the
above information.
If they were to specialise in the production...
Suppose the price of good 1 is ?1 = $6, the price of good 2 is...
Suppose the price of good 1 is ?1 = $6, the price of good 2 is
?2 = $12. Alice has ? = $120 available to spend on these two goods.
Alice has utility function ?(?1, ?2) = √?1√?2. a) Write down the
optimality condition that must hold at the optimal solution to
Alice’s utility maximization problem. b) Find Alice’s marginal
utilities for good 1 and for good 2 and find her marginal rate of
substitution. c) Find Alice’s demand...
2. Suppose that you are waiting for a friend to call you and that the time...
2. Suppose that you are waiting for a friend to call you and
that the time you wait in minutes has an exponential distribution
with parameter λ = 0.1. (a) What is the expectation of your waiting
time? (b) What is the probability that you will wait longer than 10
minutes? (c) What is the probability that you will wait less than 5
minutes? (d) Suppose that after 5 minutes you are still waiting for
the call. What is the...
Suppose you have a call option on a stock with a strike price of $2 2....
Suppose you have a call option on a stock with a strike price of
$2 2. A) Fill in the stock price and strike price in the table and
calculate the exercise value ( B) Plot the Stock price on the
x-axis and the Exercise value on the y-axis. Be sure to label both
axes with titles and include a chart title. Now assume you have the
following data for a call option: Current stock price Strike price
Time to...
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