4. What is the optimal income distribution between two citizens under these three assumptions: -The Social Welfare Function is Utilitarian. - The total income is fixed. - The two citizens have the same individual utility function, which exhibits decreasing but positive marginal utility of income.
Q: Gamma and Zeta are the only two widget manufacturers in the world. Each firm has a cost function…
A: We have here:- Total cost=TC=10+10q+q2 Inverse demand function=P=100-Q=100-q1-q2 marginal…
Q: A direct inducement that offers an extra value or incentive for the product to the sales force,…
A: Singer Bangladesh Ltd was founded in 1905, when the first Singer sewing machines were sold in…
Q: Yaster Inc. is trying to enter the thingamabob market. The research department established the…
A: Profit is the difference between revenue and cost function and when it is maximised then that point…
Q: Your younger brother needs $600 to buy a new computer. He has opened a sandwich stand to make the…
A: The elasticity of demand is the reaction of demand due to change in price of goods and services,…
Q: 1. Tim has borrowed money from Lisa and proposed to pay back the money in two payments. Tim…
A: Simple interest is calculated on the loan principle or the initial deposit in a savings account.…
Q: From the table below, what can you infer is the market price in dollars of the product? (# of…
A: The additional quantity of output gained by hiring one additional worker is known as the marginal…
Q: which of the following statement is true? (choose one letter only) a. the Marginal Revenue is the…
A: Marginal revenue and marginal cost are basis of profit maximisation.
Q: Maya would like to borrow $4500. Her bank offered her a two-year personal loan with monthly…
A: Hi! thanks for the question but as per the guidelines, we answer only one question at one time.…
Q: According to the Quantity theory of Money, MV=PT, the two sides of the equation O Is mostly correct…
A: MV = PT where M is the money V is the velocity of money which means how many times the money has…
Q: N. If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply…
A: Demand means that there is no adjustment of the amount of the item requested when the cost…
Q: Q5 In a two-period model, suppose that a consumer's utility function is: U(C₁, C₂) = log(c₁) +…
A: Utility function : U(c1, c2 ) = log (c1) + log(c2) Period 1 Budget constraint - c1 + S = Y1…
Q: Is it possible for the central bank to control inflation despite a spike in the CPI? *please explain
A: Central bank is the apex bank which controls and regulates the entire monetary structure of…
Q: To answer this question please refer to chapter 13, "Development Economics: The Wealth and Poverty…
A: Charles Wheelan's Naked Economics:Undressing the Dismal Science is a simple book to understand the…
Q: Suppose the economy begins with output equal to its natural level. Then, there is a reduction in…
A: The equilibrium level of income in the economy is determined by the intersection of the aggregate…
Q: Assume that the market for gasoline can be represented by the following demand and supply functions:…
A:
Q: U= 5x1 1/2 + 2x2. What is the marginal rate of substitution at (1, 4)? Round your answer to two…
A: Answer: Note: we are not allowed to provide handwritten solutions. Given, Utility function:…
Q: Up Down Up Down Player 1 In the game above, what is/are the sub-game perfect Nash equilibrium?…
A: We have sequential move game, where Player 1 moves first and then player 2 moves.
Q: Producter of: P(lik) = -2 (²-k² + 20 ( +20k 2=4 k=S Y = 1200 how to distribute the mustment between…
A: The optimal input bundle is such where MPK / MPL = Wage rate / Cost of capitalWhere MPK = Marginal…
Q: A country has 50 million people, 30 million of whom are adult noninstitutionalized civilians. Of the…
A: Discouraged workers refer to those workers who have hove hooked up looking got work. So they are not…
Q: A real estate developer bought land for $170 000.00 down and monthly payments of $8 450.00 for 5…
A: Given Down payment =$170,000.00 Monthly payment A=$8450.00 n=5 years r =8.75% compounded…
Q: Consider the utility maximization problem max U(x, y)=√x+y s.t. x+4y= 100. (a) Using the Lagrange…
A: A consumer is in equilibrium when he maximize his utility with given income and market prices and…
Q: A carpet company advertises that it will deliver your carpet within 15 days of purchase. A sample of…
A: The level of significance is defined as the likelihood of wrongly rejecting the null hypothesis when…
Q: What is the interest due on 200000pesos for 5 years and 3 months if it bears 14% ordmary simple…
A: Simple interest refers to the interest that is paid on principal. Principal gets converted to an…
Q: Consider the following consumption function: C(Y)=0.8 (Y-T), where Y represents income and T…
A: Budget deficit refers to difference between income and expenditure of government.
Q: Suppose a firm's total cost and marginal cost are given by TC = 192 + 10Q +3Q² and MC = 10 +6Q. What…
A: Average total price is called the sum general of all manufacturing prices divided with the aid of…
Q: You have the choice of two machines, A and B. Machine A costs $40,000 with a salvage value of…
A: We have given two options of machines to invest so we have to first calculate the annual worth of…
Q: 1. What are the characteristics of a good theory? What makes a theory practical? How can an…
A: An economic theory is a collection of concepts and principles that describe how various economies…
Q: Analyse how the level and pattern of household spending may change when GDP decreases
A: Gross Domestic Product (GDP) is the value of final goods and services produced in the domestic…
Q: A driver wishes to buy petrol and have her car washed. Petrol costs $1 a litre. The car wash…
A: Here, it is given that the price of petrol is $1 and price of car washed is $3.
Q: ements. utes. substitutes
A: In economic aspects, products are things that add some sort good for the existences of individuals…
Q: thome country and Country B as the foreign country at the real output growth rate in country A falls…
A: *Answer: Real output growth represents output growth in respect of inflation and is a true…
Q: When Ahmed's income was $2,00, he bought 6 bagels and 10 donuts a month. Now his J income is $1,500…
A: Income elasticity of demand is used to find the ratio between relative change in quantity demanded…
Q: The difference between economic profit and accounting profit is that economic profit is calculated…
A: An explicit cost is the clearly stated costs that a business incurs. For example, employee wages,…
Q: The first cost of a machine is P1,800,000 with a salvage value of P300,000 at the end of its life of…
A: Following is the given information: First cost of machine = P1800000 Salvage value = P300000 Time =…
Q: True or false and briefly why ‘Funding in full’ proposed by Alexander Hamilton is a bad idea…
A: The act of providing resources to support a need, programme, or project is what we refer to as…
Q: Demand and Supply of Labor by Firm A Output MPL Scenario 2 No. of Workers W ME 0 0 1 20 20 250 250 2…
A: We have given cost and revenue scenario of a firm which is selling and its output and using the…
Q: Explain the most appropriate type of policy for our economy right now, fiscal or monetary policy.…
A: Expansionary fiscal policy - Here the government eases the rules of tax by reducing tax rates and…
Q: A weaver working with a handloom is able to produce 16 yards of fabric per day. The typical weaver…
A: Total cost of production is the total expenditure incurred by the firm on production of the final…
Q: Question 3. Nominal and real exchange rates (a) The table below shows the nominal exchange rate…
A: The change in usual prices of goods and services that are purchased by households is what is…
Q: Consider the data for a known country for the consumer price index (CPI), by components:(base year…
A: a) The value of the CPI index in December 2018 is 107.76. The value of the CPI index in the Base…
Q: The demand and supply for bicycles is given by: Qd = 1000 - 10P Qs = 2P - 20 The government imposes…
A: Equilibrium in the market occurs at the intersection of demand and supply curves.
Q: a. What is the labor rate variance for the month? b. What is the labor efficiency variance for the…
A: division of labour, the separation of a work process into a number of tasks, with each task…
Q: Consider the data in the following table, which represents the total productio country Byzantium, a…
A: Nominal GDP - This is the GDP calculated with the price and quantity at current price without…
Q: (A). Figure 1: equilibrium exchange rate is at point 1 where expected dollar returns on dollar and…
A: Exchange rate The exchange rate is the rate at which two nations' currents are changed in the…
Q: 0 Question 26 Treasury securities are O bonds sold by the US government to pay for the national…
A: Question 26-
Q: Why might a country still produce a good on a smaller scale even if it does not have the comparative…
A: Comparative advantage refers to an economy's ability to produce a certain item or service at a lower…
Q: Hand written plz If a country switches from a flexible exchange rate regime to a fixed exchange rate…
A: Monetary policy has assumed several guises over the years. As it may appear, balancing inflation and…
Q: 4:62. The following table gives the data of production in million tons and price per ton of four…
A: The geometric average of the Laspeyres price index (which only takes the base period bundle) and the…
Q: A real estate developer bought land for $170 000.00 down and monthly payments of $8 450.0 for 5…
A: Given Down payment = 170,000 Monthly payment = 8450 $ Time = 5 years Interest rate = 8.75 %…
Step by step
Solved in 2 steps
- 1. Second Fundamental Theorem of Welfare Economicsa. Describe the theorem, making sure that you define clearly the terms used in thedescription (e.g. if you use the term “efficient” you have to describe what this means).b. Explain why the theorem implies that there is no intrinsic trade-off between efficiencyand interpersonal equity. c. Demonstrate your argument using an Edgeworth box, making sure that you describe allthe elements of the box appropriately.2. Consider a society with only two people one rich and one poor-who have the same util- ity functions. These utility functions exhibit diminishing marginal utility. Suppose that taxes are set such that the total amount of utility that each person loses is the same. Does it follow that the tax will be progressive? Explain.2. The standard model of consumer behavior assumes that income is exogenous. Of course, a person's income usually depends upon the number of hours the individual works. Suppose that an individual has T hours each day which can be allocated toward working time, H, or leisure time, L-that is, T = H + L. The individual earns w dollars for each hour worked. Then the individual's income is M + wH where M denotes any non-labor income. The individual has preferences over leisure time, L, and a consumption good, X, which can be represented by a quasi-concave utility function, U(X, L). The consumption good, X, can be purchased at the price Px. The individual seeks to maximize the utility subject to the constraints on time and money. (1) Formulate the individual's problem as an optimization problem with two constraints a time constraint and a money constraint. Derive the first-order conditions. Give an economic interpretation of the Lagrange multipliers. (2) The two-constraints problem can be…
- 1. Write down an exchange economy model with two individuals and two goods, in whichthere is no consumption externality. State and explain the key assumptions of the model.Using the model, answer the following questions:(a) Explain carefully how the concept of Pareto efficiency differs from that of socialwelfare.(b) State the Second Theorem of Welfare Economics and explain carefully why it holds.What is the importance of the assumption of convex preferences to this theorem?What is the difference between a Social Welfare Function and Social Choice Rule? Explain whether requiring a Social Choice Rule rather than a Social Welfare Func- tion successfully resolves the paradoxical results in social choice theory.3. First and Second Welfare Theorems There are two goods A and B and two inputs K and L. The production functions are Ya AK,L 1-8 The production functions display the standard properties, including constant returns to scale. A representative household has utility U(Ca, Ch) where is the consumption of good i. The total supply of each factor is fixed Ci K Ka + K, La + L,
- 1. Write down an exchange economy model with two individuals and two goods, in whichthere is no consumption externality. State and explain the key assumptions of the model.Using the model, answer the following questions:(a) Explain carefully how the concept of Pareto efficiency differs from that of socialwelfare.(b) State the Second Theorem of Welfare Economics and explain carefully why it holds.What is the importance of the assumption of convex preferences to this theorem?(c) Explain the concept of the utility possibility frontier. What is the role of the utilitypossibility frontier in the social welfare maximization problem of a welfarist society?7. An economy consists of two individuals, Lynne and Jonathan, whose utility levels are given by U₁ and U₁, respectively. a. Suppose that the social welfare function is W = U₁ + U₁ True or false: Society is indifferent between giv- ing a dollar to Lynne and a dollar to Jonathan. b. Now suppose that, instead, the social welfare function is W = U₁ + 8U, True or false: Society values Jonathan's hap- piness more than Lynne's. c. Now suppose that, instead, the social welfare function is W = min[U₂, U₁] True or false: In this society, the optimal dis- tribution of income is complete equality.3 b. State and explain the Second Theorem of Welfare Economics and discuss its economicimplications and significance.
- The figure below show the initial optimal point of a family who has to decide how much kids (K) to have in 5 years and at the same time how much of all other goods to consumer (measured as composite good in dollars). Now assuming that kids are inferior goods/services, show the new optimal point as e2 if the income of the family increases. IC₁ to Ka. Using a production possibility frontier, an arbitrary price line that does not equate supply and demand in the goods market, and a mapping of homothetic indifference curves (you only need to show one indifference curve), indicate the point of production and the point of consumption in the final goods market that this economy will choose if in addition to seeking to maximize incomes from production it also wishes to maximize utility from the consumption of goods. In your depiction, is there a shortage of A or M?6. Provide a detailed analysis of the Second Welfare Theorem of Economics
