4. Consider an exchange economy of two goods and two individuals. Consumer A has an endowment of 100 units of good 1 and 12 units of good 2 wA = (100,12), while consumer B has an endowment of 100 units of good 1 and 3 units of good 2 wB = (100, 3). The consumers' utility functions are given by: UA x14 + Inx,4 and UB x,B + 2lnx," %3D %3D Which of the following allocations is not efficient? a. (x,4, x24) = (100,5), (x,", x2") = (100,10) b. (x,4,x24) = (50,5), (x,ª , x2") = (150,10) c. (x,4,x24) = (0,4), (x,", x2#) = (200,11) d. (x,4, x24) = (100,0), (x,",x2ª) = (100,15) B %3D

4. Consider an exchange economy of two goods and two individuals. Consumer A has an endowment of 100 units of good 1 and 12 units of good 2 wA = (100,12), while consumer B has an endowment of 100 units of good 1 and 3 units of good 2 wB = (100, 3). The consumers' utility functions are given by: UA x14 + Inx,4 and UB x,B + 2lnx," %3D %3D Which of the following allocations is not efficient? a. (x,4, x24) = (100,5), (x,", x2") = (100,10) b. (x,4,x24) = (50,5), (x,ª , x2") = (150,10) c. (x,4,x24) = (0,4), (x,", x2#) = (200,11) d. (x,4, x24) = (100,0), (x,",x2ª) = (100,15) B %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A and yд are his = XBYB, Alberto's utility function is u(xA, YA) = min{A, YA}, where consumptions of goods and y. Bella's utility function is u(XB, YB) where x³ and yß are her consumptions of goods and y. Alberto's endowment is 5 units of x and no y. Bella's endowment is 11 units of y and no x. If x is the numeraire and p is the price of y in units of x, then in a competitive equilibrium ○ 11/5 = p 11/(p+1) +2.5 = 11 O min{5, 11}+11/2p=11 O min{5, 11}+5/2p=11 ○ 5/(p+1) +5.5 = 11
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