EconomicAll subparts Suppose there are two consumers, A and B. There are two goods, X and Y.There is a TOTAL of 9 units of X and a TOTAL of 9 units of Y. The consumers'utility functions are given by:UA(X,Y) = 3X + YUB(X,Y) = X2 YFor Each of the following allocations, answer True if it is Pareto Efficient, andFalse if it is not Pareto Efficient.[ Select ]Allocation A: Consumer A gets X = 7 and Y=6; Consumer B gets X = 2 and Y = 3.[ Select ]Allocation B: Consumer A gets X = 6 and Y =7;!3!Consumer B gets X = 3 and Y = 2%3D[ Select ]Allocation C: Consumer A gets X = 2 and Y =0;Consumer B gets X = 7 and Y = 9[ Select ]v Allocation D: Consumer A gets X = 1 and Y =0;Consumer B gets X = 8 and Y = 9

Pareto efficiency is an economic condition when all the resources are distributed in the most…

[ Select ] v Allocation A: Consumer A gets X = 7 and Y =6; Consumer B gets X = 2 and Y = 3. [ Select ] Allocation B: Consumer A gets X = 6 and Y =7; %3D Consumer B gets X = 3 and Y 2 %3D %3D [ Select ] v Allocation C: Consumer A gets X 2 andY=0; %3! Consumer B gets X = 7 and Y = 9 %3D %3D [ Select ] v Allocation D: Consumer A gets X = 1 and Y =0;

[ Select ] v Allocation A: Consumer A gets X = 7 and Y =6; Consumer B gets X = 2 and Y = 3. [ Select ] Allocation B: Consumer A gets X = 6 and Y =7; %3D Consumer B gets X = 3 and Y 2 %3D %3D [ Select ] v Allocation C: Consumer A gets X 2 andY=0; %3! Consumer B gets X = 7 and Y = 9 %3D %3D [ Select ] v Allocation D: Consumer A gets X = 1 and Y =0;

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 6QFR

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Suppose there are two consumers, A and B. There are two goods, X and Y. There is a TOTAL of 8 units of X and a TOTAL of 8 units of Y. The consumers' utility functions are given by: UA(X,Y) = 2X + Y UB(X,Y) = X*Y2 Which of the following allocations is Pareto Efficient? None of the other answers are Pareto Efficient. Consumer A gets 3 units of X and 8 units of Y, and Consumer B gets 5 units of X and O units of Y. Consumer A gets 4 units of X and 4 units of Y, and Consumer B gets 4 units of X and 4 units of Y. Consumer A gets 1 units of X and 4 units of Y, and Consumer B gets 7 units of X and 4 units of Y. Consumer A gets 8 units of X and 8 units of Y, and Consumer B gets 0 units of X and O units of Y.
Suppose there are two consumers, A and B. There are two goods, X and Y. There is a TOTAL of 9 units of X and a TOTAL of 9 units of Y. The consumers' utility functions are given by: UA(X,Y) = 3X + Y UB(X,Y) = X2 Y For Each of the following allocations, answer True if it is Pareto Efficient, and False if it is not Pareto Efficient. [ Select ] Allocation A: Consumer A gets X = 7 and Y =6; Consumer B gets X = 2 and Y = 3. [ Select ] Allocation B: Consumer A gets X = 6 and Y =7; !3! Consumer B gets X = 3 and Y = 2 %3D [ Select ] Allocation C: Consumer A gets X = 2 and Y =0; Consumer B gets X = 7 and Y = 9 [ Select ] v Allocation D: Consumer A gets X = 1 and Y =0; Consumer B gets X = 8 and Y = 9
10. Consumer A and B have each been given an allocation of 2 goods x and y (assume each has positive amounts of both goods). At this allocation, consumer A has an MRS of 2, while consumer B has an MRS of 1/2. Could this allocation be Pareto efficient? Explain why or why not.
5. Carol and Bob both consume the same goods in an economy of pure exchange. Carol is initially endowed with 9 units of good 1 and 6 units of good 2. Bob is initially endowed with 18 units of good 1 and 3 units of good 2. They both have the utility function U(x₁, x₂) = 1/3 x1³x2³. If we set good 1 as the numeraire (so that p₁ = $1), what will the equilibrium price of good 2 be?
If an allocation is Pareto optimal and if indifference curves between the two goods have no kinks, then (Select all that applies) Group of answer choices a. two consumers who consume both goods must have the same MRS between them, but consumers may consume the goods in different ratios. b. two consumers with the same income who consume both goods must have the same MRS, but if their incomes differ, their MRSs may differ. c. any two consumers who consume both goods must consume them in the same ratio. d. for any two consumers who consume both goods, neither will prefer the other consumer’s bundle to his own. e. all consumers receive the bundle that they prefer to any other bundle the economy could produce for them.
3. Anita (A), Ben (B) and Carlos (C) are housemates who have moved to a new house and must decide how to allocate rooms X, Y and Z. An 'allocation' is where each housemate is assigned to exactly one room. For example, Anita → Room Z, Ben → Room X and Carlos → Room Y is allocation (Z, X, Y). Utilities for each room are given below: Room X Utility for A 7 Utility for B 9 Utility for C 2 Room Y 4 3 7 Room Z 2 1 4
Carol has very weird preferences. She only cares about quantity. When evaluating a bundle, Carol only looks at the highest amount of a good she can consume in each bundle, regardless of whether it is of eggs or dumplings. She is indifferent between two bundles only when the largest consumption of a good within each bundle is the same across bundles. So, for instance, if a bundle offers 5 eggs and 1 dumpling she finds that bundle indifferent to a bundle offering 4 eggs and 5 dumplings. These preferences are transitive. But are they monotone? And convex?
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Two consumers, Budi and Marry, together have 10 apples and 4 oranges. a. Draw the Edgeworth box that shows the set of feasible allocation for the two individuals and two goods b. Suppose Budi has 5 apples and 1 orange, while Marry has 5 apples and 3 oranges. Identify this allocation in the Edgeworth box c. Suppose Budi and Marry have identical utility functions and assume that this utility function exhibits positive marginal utilities for both apples and oranges and a diminishing marginal rate of substitution of apples and oranges. Could the allocation in part (b) be economically efficient?
Let the following table represents the total utility of a given consumer, in the cardinal utility approach. Q 1 2 3 4 5 Tux 8 14 18 20 20 Tuy 6 10 13 15 16 Mux Muy Mux/px Muy/py A) Calculate the MUx and MUy and fill the table in the 4th and 5th rows. B) If the two products (X&Y) are free goods how many of X and Y should the cons consumer take to maximize utility? C) What is the maximum utility of X and Y if they are free?.
Smith and Jones are stranded on a desert island. Each has in her possession some slices of ham (H) and cheese (C). Smith prefers to consume ham and cheese in the fixed proportion of 2 slices of cheese to each slice of ham. Her utility function is given by Us = min(10H, 5C). Jones, on the other hand, regards ham and cheese as substitutes – she is always willing to trade 3 slices of ham for 4 slices of cheese, and her utility function is given by UJ = 4H + 3C. Total endowments are 100 slices of ham and 200 slices of cheese. a. Draw the Edgeworth Box diagram for all possible exchanges in this situation. What is the contract curve for this exchange economy? b. Suppose Smith’s initial endowment is 40 slices of ham and 80 slices of cheese (Jones has the remaining ham and cheese as her initial endowment). What mutually beneficial trades are possible in this economy and what utility levels will Smith and Jones enjoy from such trades? c. Now imagine a new endowment in which Smith has 60 slices…
1.2 Ann and Bob each own 10 bottles of beer and, altogether, they own 20 bags of peanuts. There are no other people and no other goods in the economy, and no production of either good is possible. Using a to denote bottles of beer and y to denote bags of peanuts, Ann's and Bob's preferences are described by the following utility functions: UA (XA, YA) = TAYA and UB (XB, YB) = 2xB+ YB. In each of the following cases, determine the market equilibrium price ratio and allocation and depict the equilibrium in an Edgeworth box diagram. (a) Bob owns 20 bags of peanuts and Ann owns no peanuts. (b) Bob owns 15 bags of peanuts and Ann owns 5 bags. (c) Ann owns 20 bags of peanuts and Bob owns no peanuts.