6. In a simple economy there are 2 inputs, each fixed in supply. These inputs are owned by two consumers. Inputs are used either in the production of x or of y. For simplicity you should assume there are only two firms. (a) Define the term 'Pareto Efficient (PE) Allocation." (b) What conditions must be satisfied for a PE allocation in this simple economy? List each separately

6. In a simple economy there are 2 inputs, each fixed in supply. These inputs are owned by two consumers. Inputs are used either in the production of x or of y. For simplicity you should assume there are only two firms. (a) Define the term 'Pareto Efficient (PE) Allocation." (b) What conditions must be satisfied for a PE allocation in this simple economy? List each separately

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section30.2: Internalizing Externalities

Problem 2ST

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A nomadic tribe in Lapland spends all its productive time hunting reindeer. Someof the reindeer meat is kept for consumption and the remainder is sold at a nearbytrading station in return for other goods. It is observed that when the price ofreindeer meat increases the amount the tribe is willing to supply decreases.(a) Sketch this situation in a diagram, with axes ‘reindeer meat’ and ‘all othergoods’. (Hint: locate the production position and sketch the consumptionopportunities line before and after the price change).(b) Determine if reindeer meat is an inferior good to the tribe?(Hint: consider what happens to the consumption position).(c) How does the analysis change if the tribe can hunt and trade fish as well as thereindeer? (Hint: now label the axes ‘reindeer meat’ and ‘fish’ and considerboth the production and consumption decisions
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10. In terms of Adam Smith’s concept of the invisible hand, an efficient overall allocation of resources is likely to result from?
12 Investment Figure 14.4 383.Figure 14.4 shows three possible shifts in the production possibilities frontier of a country. Which allocation would be the most likely explanation for shift number 3? (A) R (B) W (C) x (D) Y (E) Shift number 3 is not possible. LHH actment Consumption
Why do problems related to allocation of resources in an economy arise?. Explain.
4. It is said that the market forces of supply and demand, which determine the equilibrim price and quantity allocated economic recources efficiently. Is this "fair" to those that at the market price cannot afford to purchase the product?
1. Using the figure above, what is the optimal quantity of goods for the firm to produce?
2.- There are 10 consumers in the market for Corn, 5 have income $20 and 5 have income $40. Each of them has preferences over corn (C) and Barley (B), the only two goods they consume, represented by the utility function U(C, B) = C x B. (The price of Barley, is $1.) There are 10 firms that produce Com using labor L and land K, with the production function C = LiKi. Each firm has a lease on a plot of land of size 10 (acres). The --rental-- price for K is r=0.5 and the wage rate is w=3. In the short run (this problem refers to the short run), K is then fixed for each firm. t run Obtain the (individual and then market) demand and the supply functions of C, and then compute the equilibrium price and quantity in this market.
D A В Refer to the diagram. Assume that the horizontal axis measures the quantity of a good and the vertical axis measures the marginal-benefit and marginal cost of the good. Assuming that the good represented here has at least some positive behefits and costs, which line(s) represent(s) a possible marginal-benefit curve?
person 1 can allocate her 8 hour day between the production of two goods: A and B. Each hour devoted to good B yeilds 2units . whereas each hour devoted to good A produces 4 units. state whether 9 units of good B and 12 units of good A are unattainable, efficient, or inefficient.(state all that applies) select one or more attainable inefficient efficient unattainable
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