Question

Consider a pure exchange 2x2 edgeworth box economy model where each individual has preferences given by:...

Consider a pure exchange 2x2 edgeworth box economy model where each individual has preferences given by:

u(x,y) = ln(x) + ln(y)

Consumer A is endowed with 1 unit of x and 2 units of y. Consumer B is endowed with 3 units of x and 1 unit of y. If the prices of good x and y are given by the vector (px, py) = (1, 1), which of the following statements are true? (check all that apply)

1) there is a surplus in the market for good x

2) there is a shortage in the market for good x

3) there is a surplus in the market for good y

2) there is a shortage in the market for good y

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answers options 1 & 4

• there is a surplus in the market for good x

• there is a shortage in the market for good y

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a pure exchange 2x2 edgeworth box economy model where each individual has preferences given by:...
Consider a pure exchange 2x2 edgeworth box economy model where each individual has preferences given by: u(x,y) = ln(x) + ln(y) Consumer A is endowed with 1 unit of x and 2 units of y. Consumer B is endowed with 3 units of x and 1 unit of y. Which of the following coordinates in the edgeworth box represent allocations that are pareto efficient? Use the perspective of individual A's origin and report the coordinates inside the box (check all...
Consider a pure exchange 2x2 edgeworth box economy model where Consumer A has (strictly) monotonic preferences...
Consider a pure exchange 2x2 edgeworth box economy model where Consumer A has (strictly) monotonic preferences over good Y and is otherwise indifferent between any levels of good X. Consumer B has (strictly) monotonic preferences over good X and is otherwise indifferent between any levels of good Y. If each consumer is endowed with 1 unit of good x and 2 units of good y, then what is the ratio of the price of prices, Px/Py, that will clear both...
Consider a pure exchange 2x2 edgeworth box economy model. Each consumer is endowed with one unit...
Consider a pure exchange 2x2 edgeworth box economy model. Each consumer is endowed with one unit of each good. Consumer A has (strictly) monotonic preferences over good y and is otherwise indifferent between any levels of good x. The preferences for consumer B are given by Ub (x, y) = x + y From consumer A's perspective (so that A's origin is in the bottom left corner of the box with good y measured on the vertical axis and good...
Consider an Edgeworth box economy endowed with one unit of capital and two units of labor....
Consider an Edgeworth box economy endowed with one unit of capital and two units of labor. If the producer of good x has the production function f(K, L) = K + L And the producer of good y has the production function of f(K, L) = min(K, L) Which of the following (x, y) allocations are Pareto efficient? (Check all that apply) (3, 0) (0, 1/2) (1, 1) (0, 1)
Consider a pure exchange economy with two consumers, Ann (A) and Bob (B), and two commodities,...
Consider a pure exchange economy with two consumers, Ann (A) and Bob (B), and two commodities, 1 and 2, denoted by (x^A_1, x^A_2) and (x^B_1, x^B_2). Ann’s initial endowment consists of 20 units of good 1 and 5 units of good 2. Bob’s initial endowment consists of 0 unit of good 1 and 5 units of good 2. The consumers’ preferences are represented by the following Cobb-Douglas utility functions:U^A(x^A_1, x^A_2) = (x^A_1)^2(x^A_2)^2 and U^B=√x&B1√x^B2. Denote by p1 and p2 the...
5. Harry Mazola [4.7] has preferences u = min (2x + y, x + 2y). Graph...
5. Harry Mazola [4.7] has preferences u = min (2x + y, x + 2y). Graph the u = 12 indifference curve. Mary Granola has preferences u = min (8x + y, 3y + 6x). Graph the u = 18 indifference curve. 6. A consumer with m = 60 is paying pY = 2. They must pay pX = 4 for the first 5 units of good x but then pay only pX = 2 for additional units. The horizontal...
Consider a pure exchange economy with 2 goods and 3 agents. Good y is the numeraire,...
Consider a pure exchange economy with 2 goods and 3 agents. Good y is the numeraire, so we set py = 1. • Mr. 1 is Cobb-Douglas of type λ = 0.25 and is endowed with (10, 4). • Mr. 2 is Cobb-Douglas of type λ = 0.5 and is endowed with (5, 9). • Mr. 3 is Cobb-Douglas of type λ = 0.75 and is endowed with (20, 20). In the following steps, you will find the equilibrium of...
A consumer has preferences given by U(x, y) = min[x, y]. (a) Calculate the equilibrium quantities...
A consumer has preferences given by U(x, y) = min[x, y]. (a) Calculate the equilibrium quantities of x and y when px = $2, py = $3 and I = 12. (b) Suppose px increases to $3 when a per unit tax of $1 is placed on x. What is the new value of x and how much tax revenue is raised? (c) Suppose that the same tax revenue is raised by an income tax as opposed to a per...
(a) A consumer has a budget constraint which takes the usual form  m ≥ pxx + pyy,  ...
(a) A consumer has a budget constraint which takes the usual form  m ≥ pxx + pyy,   (where  m is income and  px, py   are the prices of x and y  respectively), and is observed to choose (x, y) = (3, 5) when (px, py) = (1, 2)   and (x, y) = (5, 3) when (px, py) = (2, 1). Is the consumer’s behaviour consistent with the (weak) axiom of revealed preference? (b) Suppose an individual has no income, but is endowed with 10 units...
(a) A consumer has a budget constraint which takes the usual form m ≥ pxx +...
(a) A consumer has a budget constraint which takes the usual form m ≥ pxx + pyy, (where m is income and px, py are the prices of x and y respectively), and is observed to choose (x, y) = (3, 5) when (px, py) = (1, 2) and (x, y) = (5, 3) when (px, py) = (2, 1). Is the consumer’s behaviour consistent with the (weak) axiom of revealed preference? (b) Suppose an individual has no income, but...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT