Question

Consider an exchange economy with two consumers A and B, and teo goods X and Y....

Consider an exchange economy with two consumers A and B, and teo goods X and Y.
A's utility function is Ua=X^(1/3)Y^(2/3) and B's utility function is Ub=X^(2/3)Y^(1/3).
Initial endowments for A are (18,4) and for B are (2,6).

Q. Suppose that B realizes he has market power and hence optimizes by controlling price. Individual A behaves as price taker. Formulate the optimization problem of individual B and solve the equilibrium.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Suppose there are two consumers, A and B. The utility functions of each consumer are given...
Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X2Y UB(X,Y) = X*Y Therefore: For consumer A: MUX = 2XY; MUY = X2 For consumer B: MUX = Y; MUY = X The initial endowments are: A: X = 120; Y = 6 B: X = 30; Y = 14 a) (20 points) Suppose the price of Y, PY = 1. Calculate the price of X, PX that will lead...
4: There is an exchange economy with two agents, A, B, and two goods,  x, y. A's...
4: There is an exchange economy with two agents, A, B, and two goods,  x, y. A's endowment is x = 6, y = 4, and B's endowment is x = 4, y = 6. (a) A has the utility function  u(x, y) = x + y  and B u(x, y) = xy. Find a competitive equilibrium allocation (CEA) and associated equilibrium prices. What difference would it make if A's endowment is x = 3, y = 1, and B's endowment is x...
For two agents, a and b, with the following utility functions over goods x and y...
For two agents, a and b, with the following utility functions over goods x and y (6) ua= ua(xa,ya)=xa^1/4 ya^3/4 ub=ub (xb,yb) = xb^1/2 yb^1/2 Calculate the utility level before and after trading. initial endowments ωa=(4,5) and wb=(3,2)
Suppose there are two consumers, A and B, and two goods, X and Y. The consumers...
Suppose there are two consumers, A and B, and two goods, X and Y. The consumers have the following initial endowments and utility functions: W X A = 2 W Y A = 9 U A ( X , Y ) = X 1 3 Y 2 3 W X B = 6 W Y B = 2 U B ( X , Y ) = 3 X + 4 Y Suppose the price of X is PX=2 and the...
Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A...
Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 4 units of good X and 4 units of good Y. Consumer B is given an initial endowment of 4 units of good X and 4 units of good Y. Consumer A’s utility function is given by: UA(X,Y) = X*Y4, and consumer B’s utility function is given by UB(X,Y) = X*Y. Therefore, consumer A’s marginal utilities for each...
2) For two agents, a and b, with the following utility functions over goods x and...
2) For two agents, a and b, with the following utility functions over goods x and y (6) ua=ua(xa,ya)=xaya ub=ub(xb,yb)=xbyb a) Determine the slope of the contract curve in the interior of an Edgeworth box that would show this two-person two-goods situation. b) For initial endowments ωa=(12,7) and ωb=(9,10), what is the Walras allocation between the two agents a and b? (Remember that it is the relative price of the goods that matters in this consideration. Also remember that all...
Suppose there are two consumers, A and B. There are two goods, X and Y. There...
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) = 4X + Y UB(X,Y) = X*Y For each of the following allocations, write TRUE if it is Pareto Efficient and FALSE if it is not: i) Consumer A gets 6 units of X and 2 units of Y, and...
1. Suppose there are two consumers, A and B. The utility functions of each consumer are...
1. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X*Y UB(X,Y) = X*Y3 Therefore: • For consumer A: MUX = Y; MUY = X • For consumer B: MUX = Y3; MUY = 3XY2 The initial endowments are: A: X = 10; Y = 6 B: X = 14; Y = 19 a) (40 points) Suppose the price of Y, PY = 1. Calculate the price of X, PX...
1.Suppose there are two consumers, A and B. The utility functions of each consumer are given...
1.Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X^1/2*Y^1/2 UB(X,Y) = 3X + 2Y The initial endowments are: A: X = 4; Y = 4 B: X = 4; Y = 12 a) (10 points) Using an Edgeworth Box, graph the initial allocation (label it "W") and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and accurately....
) For two agents, a and b, with the following utility functions over goods x and...
) For two agents, a and b, with the following utility functions over goods x and y (6) ua= ua(xa,ya)=xa^1/4 ya^3/4 ub=ub (xb,yb) = xb^1/2 yb^1/2 Determine the slope of the contract curve in the interior of an Edgeworth box that would show this two-person two-goods situation.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT