Draw the indifference curve for each consumer

Assignment Help Business Economics

Reference no: EM131003647

Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X+2Y UB(X,Y) = X*Y The initial endowments are: A: X = 2; Y = 8 B: X = 2; Y = 8 a) Using an Edgeworth Box, graph the initial allocation and draw the indifference curve for each consumer that runs through the initial allocation. Be sure to label your graph carefully and accurately. b) What is the marginal rate of substitution for consumer A at the initial allocation? c) What is the marginal rate of substitution for consumer B at the initial allocation? d) Is the initial allocation Pareto Efficient?

Reference no: EM131003647

Questions Cloud

What rate compounded monthly would be required : If you deposit $10,000 in a savings account now, what rate compounded monthly would be required for you to withdraw $12,500 at the end of 5 years

If preferences are strictly monotonic : If preferences are strictly monotonic then it will be optimal for the consumer to consume all their income (i.e. be on the budget line). Is this still true if preferences are weakly monotonic?

Find the equilibrium market price and quantity : The market supply curve for rubber erasers is given by Q_S=1+2P, where quantity is measured in thousands. The demand for rubber erasers can be segmented into two components. The first component is the demand for rubber erasers by art students. Derive..

What is the minimum investment : What is the investment objective and top 5 holdings for the real estate security: TIREX (look in yahoo finance). Are the holdings consistent with the investment objective? Is the Fund highly diversified? Explain. Where is it traded? What is the minim..

Draw the indifference curve for each consumer : Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X+2Y UB(X,Y) = X*Y The initial endowments are: A: X = 2; Y = 8 B: X = 2; Y = 8 a) Using an Edgeworth Box, graph the initial allocation and draw t..

Given the change in the budget constraint : Using the book Intermediate Microeconomics and its application by Walter Nicholson 12th Edition in Figure 5.1 7 - Given the change in the budget constraint, which of the following statements is TRUE A) The demand curve for good Y shifted inward B) Th..

Money into a mutual fund that holds stocks : Why might someone with only $1,000 to invest in the stock market be better advised to put that money into a mutual fund that holds stocks rather than buying stocks directly?

Wynn sheet metal reported an operating loss : Prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carry back option.

Find the current bid-ask spread : Look up Humana Energy (HUM) and find the current bid-ask spread as well as the order size for the bid and ask, during the trading day (Yahoo Finance). Discuss the consequence of these numbers for the risk of the firm.

User Account

All Pages