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the new initial sfer imposed by Marge. Label this noizt

the new initial sfer imposed by Marge. Label this noizt

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. Assuming Bart and Homer barter (no pun intended), highlight the area of all post-trade allocations both of them prefer to their initial endowment. 3. What determines which particular post-trade allocation they end up with? Marge observes what is going on and intervenes. She (acting as the "Government' in our example) decides that Bart should not have any beer. She makes a lump-sum transfer leading to new initial endowments for Bart (0,21) and Homer (38,0). 4. In your Edgeworth box show the new initial endowments after the lumpsum transfer imposed by Marge. Label this poișt e2. (1 point) 5. After Marge's transfer mark one new possible post-trade allocation (Label this point f.) and draw the associated indifference curves for Bart and Homer. (1 point) 6. Did Marge succeed in her mission to not let Bart have any beer? Why or why not? 7. Add the contract curve to your Edgeworth box. 8. What do all points on the contract curve have in common?
Transcribed Image Text:2. Assuming Bart and Homer barter (no pun intended), highlight the area of all post-trade allocations both of them prefer to their initial endowment. 3. What determines which particular post-trade allocation they end up with? Marge observes what is going on and intervenes. She (acting as the "Government' in our example) decides that Bart should not have any beer. She makes a lump-sum transfer leading to new initial endowments for Bart (0,21) and Homer (38,0). 4. In your Edgeworth box show the new initial endowments after the lumpsum transfer imposed by Marge. Label this poișt e2. (1 point) 5. After Marge's transfer mark one new possible post-trade allocation (Label this point f.) and draw the associated indifference curves for Bart and Homer. (1 point) 6. Did Marge succeed in her mission to not let Bart have any beer? Why or why not? 7. Add the contract curve to your Edgeworth box. 8. What do all points on the contract curve have in common?
Question 9 General Equilibrium Bart and Homer have beer and skateboards. As their initial endowment Bart has (8,20), Homer has (30, 1). Assume their utility functions have the usual properties (diminishing marginal utility for both goods, 'more-is-better' - in that sense Bart is like his dad: he can never have enough!!) and each of their utilities does not depend on the quantity consumed by the other person. 1. Draw an Edgeworth box. Put beer on the x axis and skateboards on the y axis; and Bart in the left-lower corner. Show their initial endowments (label this point e) & their initial indifference curves. Label everything and DRAW IT LARGE so you can fit in all your answers to the following questions!
Transcribed Image Text:Question 9 General Equilibrium Bart and Homer have beer and skateboards. As their initial endowment Bart has (8,20), Homer has (30, 1). Assume their utility functions have the usual properties (diminishing marginal utility for both goods, 'more-is-better' - in that sense Bart is like his dad: he can never have enough!!) and each of their utilities does not depend on the quantity consumed by the other person. 1. Draw an Edgeworth box. Put beer on the x axis and skateboards on the y axis; and Bart in the left-lower corner. Show their initial endowments (label this point e) & their initial indifference curves. Label everything and DRAW IT LARGE so you can fit in all your answers to the following questions!
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