Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 18, Problem 8Q
To determine
Difference in allocations depending on when the allocator remains anonymous in a dictator game.
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Aanchal and Bradyn are two homo economicus engaged in exchange over sour snakes (x) and peanut butter cups (y). Their utility functions are given by the following: Aanchal: u A = x ^1/4 A y ^3/4 A Bradyn: uB = x^1/4B y ^3/4 B Aanchal has an initial endowment of 5 peanut butter cups and 13 sour worms. Bradyn has an initial endowment of 10 peanut butter cups and 7 sour worms.
g. What is Bradyn’s marginal rate of substitution of peanut butter cups (yB) for sour snakes (xB)?
Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. Students in group A are given food (F) when they walk in, and students in group B are given a drink (D).
Refer to Scenario 1. Suppose they have very different preferences where food and drink provide utility. For group A, U = FαDβ. For group B, U = min{F,D}. The contract curve in the Edgeworth box using a representative from each group would be
(a) a right angle connecting the lower left corner with the upper right corner.(b) a curve (not necessarily a line) connecting the lower left corner with the upper right corner.
(c) a line connecting the lower left corner with the upper right corner.(d) a right angle connecting the upper left corner with the lower right corner.
Owen and Simon both like playing with balls and cars. Suppose B represents the number of balls, and C represents the number of cars. If Owen's utility function can be
given by U(B, C) = 10B + 5C, and Simon's utility function can be given by U(B, C) = 6B + 6C, which of the following trades would be mutually beneficial?
Ⓒa. Owen gives Simon 2 balls in exchange for 3 cars
b. Owen gives Simon 2 cars in exchange for 3 balls
ⒸC. Owen gives Simon 3 cars in exchange for 2 balls
Ⓒd. Owen gives Simon 3 balls in exchange for 2 cars
Chapter 18 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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