Competitive general equilibrium Amy(A) andBrian (B) have the following utility functionU^A= 2XaYa, U^B= √XbYbWere there endowment of consumption good Xand Y are as follows:Xa= 60 Ya = 80 Xd=30 Yb=180At the endowment point what is the marginalrate of substitution of X for Y for Amy? For Brian?Find the competitive equilibrium price of thegoods at which the consumers trade with eachotherIn the competitive equilibrium for each unit ofgood Y how many units of good X can beexchanged.Find both brian and amy preferredconsumption bundles in the equilibriumIs the allocation of resources achieved in partd pareto-optimal? Explain.Draw the edgeworth box that shows allpossible allocations and plot the endowmentpoints. Plot the indifferent curves of the twoconsumers and the contract curve in theedgeworth box as well.

Answered: At the endowment point what is the…

At the endowment point what is the marginal rate of substitution of X for Y for Amy? For Brian? Find the competitive equilibrium price of the goods at which the consumers trade with each other

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.4P

See similar textbooks

Related questions

Q: Consider following extensive form game Keep Prices (8,2) Advertise Lower Prices (4.6) Firm 1 Firm 2…

Q: Suppose the following for a resource (measure in tons): Market demand schedule is Pd = 200 - 4Q…

A: Socially efficient quantity: The quantity that maximizes the addition of the consumer and producer…

Q: The demand and supply for headphones are given as: Q=60-4P Q³=4P-20 If the government imposes a $6…

A: Since you have asked a question with multiple sub-parts we will solve the first three sub-parts for…

Q: Assume a government starts with zero debt. This government then runs an annual deficit for 29 years…

A: Government debt also known as public debt is nothing but the liabilities of the government. A…

Q: A monopolistically competitive market has characteristics that are similar to Question 16…

A: Monopoly market structure is characterized with only a single seller facing no competition in the…

Q: The consumption function shows a positive relationship between an individual's stock of wealth and…

A: Disposable income is income minus net taxes. i.e., Disposable income = Income - Net taxes…

Q: arry, Megan, Raphael, Susan, and Janet share a five-bedroom house and are all huge Pittsburgh…

A: A significant characteristic of the marketplace is that in some circumstances it produces what we…

Q: what is price discrimination.Give examples

A: DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If…

Q: What is Monopolistic Competition?

A: What do you mean by Monopolistic competition ?

Q: Without other policy counter-measures, a "carbon" tax on gasoline would be a O Progressive O…

A: Carbon tax refers to the tax imposed by regulatory authorities on the firms when there is carbon…

Q: Consider three cities with populations of 150,000 (City A), 140,000 (City B), and 10,000 (City C).…

A: Check below mention step for the solution

Q: South Asia has a lower income per capita than subSaharan Africa.” Comment on the validity of…

A: The amount of money made by each resident of a region (such as a nation, state, city, or other…

Q: Hong Kong is a country characterized by low tax rates and limited government services. What type of…

A: A complex network of interwoven trade, consumption, and production activities makes up an economy,…

Q: = Suppose you are trying to minimize your expenditures E utility level (x0.5 + x2.5)2 = 175 6 4x1 +…

A: Basic introduction Expenditure minimization means that minimum money is required to achieve a given…

Q: What type of demand is it, if a one-percent decrease in price results in more than one percent…

A: Price elasticity measures the change in quantity due to change in its price. When the absolute…

Q: 1. If the demand and supply functions of a good are known, the following equation shows: P-12 Q+30=0…

A: A market equilibrium is a situation where the demand and supply of goods are equal. That is a…

Q: 21- Who gets paid after the death of the policy-holder/insured? a. The husband/wife of the…

A: In an insurance agreement, the insurer is responsible for compensating one party for losses brought…

Q: Suppose GDP is £32 trillion, consumption is £25 trillion, taxation is £4.3 trillion and private…

A: Gross domestic product is the measure of the market value of all the final goods and services…

Q: From the perspective of the destination economy, "Supply Push" immigration generally results in…

A: Increase in supply means the rightward shift in supply curve. The rightward shift in supply curve…

Q: Question 8 The market for loanable funds in country 1 is described by the equations I = 18 - 6r and…

A: The investment has a negative relationship with interest rate .Rise in interest rate will increase…

Q: A monopolist with constant marginal cost of $4 faces demand Qp-24-2P. This implies that the inverse…

A: Inverse demand curve: P=12-QD2 Marginal revenue MR=12-QD Marginal cost MC=$4 Price ceiling at P=$6 A…

Q: From the perspective of the destination economy, "Demand Pull" immigration generally results in…

A: People emigrate for a variety of economic, social, and physical reasons, which are typically…

Q: Suppose that the principal of a synthetic CDO is $125 million. The equity, mezzanine, and senior…

A: Suppose that the principal of a synthetic CDO is $125 million. The equity, mezzanine, and senior…

Q: To create inflation, aggregate demand must increase True O False

A: Since you have asked multiple questions we are answering the first question for you. If you want…

Q: B: Theory: Market power Terminology: diminishing returns to scale (DRS), constant returns (CRS),…

A: A monopoly refers to a market condition in which there are only on single seller/firm. The firm…

Q: True or False. Cyclical Unemployment = Frictional + Structural Unemployment. True. False.

A: A person is said to be cyclical unemployed when he/she lost a job due to economic recession. A…

Q: Real per capita GDP across the world has stayed constant since the year 1800. true false

A: Real GDP measures the market value of final goods and services produced by a nation at base year…

Q: Which of the following is not an advantage of corrective taxes? Ca. They subsidize the production of…

A: Introduction A corrective tax is a policy option that governments can use to improve a market…

Q: You are going to Japan on an exchange trip in a few months and need to turn your dollars into the…

A: Given information: You are going to Japan on an exchange trip in a few months and need to turn your…

Q: If money is a neutral medium of exchange, as Adam Smith defined it, why does money today divide…

A: The neutrality of money: According to the 18th-century classical economist, Smith, an economy's…

Q: Suppose firms in a monopolistically competitive market are experiencing positive economic profits,…

A: In a market system known as monopolistic competition, there are numerous powerful sellers, each of…

Q: CSUN receives a $15 million grant to train middle and high school science and math teachers. The…

A: The benefit-cost ratio is one of the measures to compare the benefits of an alternative with its…

Q: About how fast did a country's population grow per year if it had 100 million people in 1950 and 200…

A: Growth Rate represents the change in variable like income, population, sales etc over a particular…

Q: Under what condition will L&P agree to produce the allocatively efficient quantity?

A: A monopoly is a market structure where there is a single supplier of the product with no close…

Q: One key difference between an oligopoly market and a competitive market is that oligopolistic firms…

A: A competitive market determines price at the intersection of market demand and market supply curve,…

Q: Suppose initially that the price of X is $5, the price of Y is $10, and the consumer's income is…

A: Given information: Price of good X is $5 Price of good Y is $10 Consumer income is $100 Y is…

Q: TRUE OR FALSE. If the price elasticity of demand is 2 while the price elasticity of supply is 2, the…

A: Tax incidence studies the division of tax burden between buyers and sellers. Formula Tax burden on…

Q: Suppose that you and a friend have started a pizza delivery business. First you had to find a shop…

A: Fixed cost refers to the cost that remains constant or same at all level of output. It does not…

Q: After having started a highly unpopular war in Europe, the president of Leninslavia can only sell…

A: Price discrimination refers to the situation when the seller of a good is able to sell the same…

Q: You have an asset with a cost of investment (I) of $10,000 with a useful life (N) of 5 years, and a…

A: Given Initial investment I=$10,000 Salvage value (S)=$2000 Life of asset (N)=5 years Required:…

Q: Suppose that the market demand is Q=80−Pand the marginal cost is $20. Suppose two identical firms…

A: When the players/firms collide, the act as a monopolist and maximises profit by jointly producing at…

Q: The following are elements of a strong intellectual property protection system, EXCEPT:

A: Introduction. Intellectual property rights are rights granted to an individual so as to protect…

Q: The LEGO Architecture Collection includes three items: the White House Model Building Kit (at $80…

A: TC(Total cost) is the amount of expenditure occurred on the production of goods and services. The…

Q: A major storm passes through Pennsylvania which causes wind damage to many homes. One homeowner does…

A: Insurance Policies contain various types of conditions which are to be fulfilled in order to make…

Q: The table below shows the price of the basket of goods and services for each of the following years:…

A: Consumer price index measures the change in price paid by consumer for a specific goods basket.…

Q: What does it mean if a shadow price is negative? Select one: a. It means the model is implemented…

A: We have to find what does it mean if a shadow price is negative .

Q: Discuss why a host country might promote or restrict foreign direct investment.

A: Foreign direct investment (FDI) is a kind of cross-border investment in which a stake in and…

Q: According to Robert Putnam, the rise of bowling alone represents the decline in the urban poverty…

A: Robert Putnam is an American political scientist who specializes in comparative politics. He was a…

Q: The government of Waterland decides to increase the supply of money a lot in an effort to make the…

A: Money Supply (MS) is the sum amount of money in circulation that includes currency notes, coins, and…

Q: QUESTION 21 Please refer to the figure below. Price and cost 0 MR Loss Demand B MC ATC Quantity…

A: A market structure characterized by a single seller selling a market-exclusive product is known as a…

Question

Competitive general equilibrium Amy(A) and
Brian (B) have the following utility function
U^A= 2XaYa, U^B= √XbYb
Were there endowment of consumption good X
and Y are as follows:
Xa= 60 Ya = 80 Xd=30 Yb=180
At the endowment point what is the marginal
rate of substitution of X for Y for Amy? For Brian?
Find the competitive equilibrium price of the
goods at which the consumers trade with each
other
In the competitive equilibrium for each unit of
good Y how many units of good X can be
exchanged.
Find both brian and amy preferred
consumption bundles in the equilibrium
Is the allocation of resources achieved in part
d pareto-optimal? Explain.
Draw the edgeworth box that shows all
possible allocations and plot the endowment
points. Plot the indifferent curves of the two
consumers and the contract curve in the
edgeworth box as well.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

1. Hatfield and McCoy hate each other. The only good they both consume WH W2 40 Mand McCoy's is whiskey. Hatfield's utility function is UH utility function is UM = WM-W, where WHI is Hatfield's consumption 40' Η of whisky and WM is McCoy's consumption of whiskey. The sheriff has confiscated a total of 60 litres of whiskey which he could give back to them or throw in the creek. Say that the Sheriff wants them both to be as well off as possible and weighs their "happiness" equally. How much whiskey should the sheriff give to each of them? Should he throw any whiskey in the creek; if so how much? =
4. a. Consider a consumer with preferences defined over x and y. Demonstrate that it is possible theywould choose to consume some of both commodities when their income is I but would choose toconsume only x when their income is I’ > I. (Remember: if you can draw it without violating anyof the basic assumptions on preferences, it could happen.) b. Conversely, demonstrate that it is possible they would choose to consume only x when theirincome is I but would choose to consume x and y when their income is I’ > I.c. Finally, show it is possible that they would choose to consume only y when their income is I butwould choose to consume only x when their income is I’ > I.
Explain the difference between a positive and a negative network externality. A network externality for a good is positive if O A. the substitution effect of a price change is larger than the income effect, but a network externality is negative if the income effect is larger than the substitution effect. B. consumption by others decreases a typical consumer's marginal utility from consuming the good, but a network extemality is negative if consumption by others increases a typical consumer's marginal utility from the good. c. the price is lower the more people own it, but a network externality is negative if the price is lower the fewer people own it. D. the quantity demanded is higher the more people own it, but a network externality is negative if the quantity demanded is lower the more people own it. O E. it has a complement, but a network effect is negative if it has a substitute. Give an example of each. An example of a positive network externality is the dermand for A. a work of…
Answer the following short questions:a. Suppose that a consumer’s preferences between goods x andy are represented by the utility function u(x, y) = x^2 + 16xy + 64y^2. If these two goods have the same price, describe the optimal consumptionchoice of this consumer.b. Suppose that when the price of a good change, the incomeand substitution effects change the consumer’s demand for that goodin opposite directions.i. Is this good a normal or an inferior good? Explain.ii. Is this good a Giffen or an ordinary good? Explain.c. Is the following statement true or false? The differencebetween a monopolist’s marginal cost and its profit-maximizing price issmaller when the demand is more elastic.
I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like?
Guerdon always puts half a sliced banana, q, , on his bowl of cereal, q, The two 14 goods are perfect complements. What is his utility function? Derive his demand curve for bananas graphically and mathematically. 12- 10- e, Guerdon's utility function (as a function of q, and q2) is 6- VA U= min/2q1.92} 4- O B. U=q, +92- 2- 0+ OC. U=29, + q92- 10 12 14 16 18 20 6 22 Bananas O D. U=0.5q1 + q2- OE. U=q, xq2- 5.00- 4.50- Guerdon's demand function for bananas (as a function of the price of bananas, P1. the price of a bowl of cereal, p2, and income, Y) is 4,00- 3.50- 91 = (p1 + 2p2) (Properly format your expression using the tools in the E 3.00 palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the_ character.) 2.50- * 2.00- P. 1.50- 1.00- 0.50- 0.00+ 10 12 14 Bananas tv 80 DI DD F1 F3 F4 F5 F6 F7 F8 F10 @ %23 $ & 1 3 4 7 Q W E Y U S F H. J く C V M option command command optic ーの * CO Cereal (bowls) p. S per banana B * * N A
Soppose Felix has 9dollars to spend on good x and y.The price ofgood Y is one.If consuming 6units of good y is utilitymaximizing,what must be the price of good x and the amount of goodx that he consumes for a utility function ofa.U=x^(1/3)y^(2/3)b.U=x+2yc.U=x+ln y
If the preferences are concave will the consumer ever consume both ofthe goods together?
Carol needs to decide how to spend her wealth on sh and chicken.For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preferences2Intermediate Microeconomics NYUAD, Spring 2023can be represented by the utility functionu(x; y) = 2x + ywhere x is the quantity of sh (in lbs) and y is the quantity of chicken(in lbs). The consumption set is R2+.(a) Draw two typical indi erence curves for Carol, one correspondingto a utility level of u1 and one corresponding to a utility level u2,where 0 < u1 < u2. Make sure you label the slope of the indif-ference curves and the intercepts with the horizontal and verticalaxes.(b) Suppose the price of sh is $1:5 per lb and and the price of chickenis $1 per lb. Carol has $20 to spend on sh and chicken.(i) Draw Carol's budget set, labeling the slope and the interceptpoints clearly.(ii) How much sh and chicken will Carol choose to purchase?
A) What is substitution effect? And how it effects purchase decision of consumer? in detail B)What is intertemporal choice? And how it is elaborated in economics? in detail
4) Assume Linda only buys two goods, chicken and rice with her income of M, and prices, Pc & PR. a) Graph her consumer choice model (with chicken on thex axis. Nowlet price of chicken fall, causing Linda to consume more chicken and more rice. Indicate the income and substitution effects on the graph. b) Based on your graph from part a, draw Linda’s ordinaly demand (do) and compensated demand (dc) curves for chicken c) (True/False) this chicken must be a nomal good. Explain how you know. d) (True/False) this rice must be a nomal good. Explain how you know.
2. What does it mean that preferences are complete? Now would the real-life implica- tions of this assumption look like?