Plot the contract curve, Strategic Management

Problem: Two people are sharing an apartment in New York City, including all the food in the fridge. Currently, the fridge is ?lled with 30 sodas and 30 burgers. Assume person 1's utility from consuming burgers (b) and sodas (s) is u1(b1; s1) = b1 * s1, while the utility of person 2 is u2 = 3 * b2 + s2.

a) Fixing the utility level of person 2 at  u2, solve for the number of sodas person 2 has to drink as a function of the burgers he/she eats.

b) Using the results from part a), write down the resulting utility of person 1 as a function of the number of burgers b1 only, where the number of sodas is given by the requirement that person 2's utility remains at level  u2.

c) Solve part b) for the optimal number of burgers and sodas as a function of  u2.

d) Solve for the contract curve and plot it.

e) Suppose individual 1 has 10 burgers and 10 sodas. Is this a Pareto Optimum? If so argue why, if not provide a di?erent allocation that would make both individuals better off.

Posted Date: 2/19/2013 6:51:54 AM | Location : United States







Related Discussions:- Plot the contract curve, Assignment Help, Ask Question on Plot the contract curve, Get Answer, Expert's Help, Plot the contract curve Discussions

Write discussion on Plot the contract curve
Your posts are moderated
Related Questions
Q. Calculate the Earnings per share? EPS = Profit available to ordinary shareholders (PAT)/Weighted average number of shares in issue (Pence per share) This ratio shows t

Q. What do you mean by Dual pricing? Dual transfer pricing means setting one transfer price for the internal seller and another transfer price for the internal buyer.  The basi

Q. Explain about Dividend yield ? Dividend yield     = (Dividend per share/Market share price) x 100% The dividend yield is the cash return on the share (not the whole retur

The amount and pace of market adoption.

Marketing Strategy for Services This activity is part of your marketing plan.  Prepare a 4-5 page report, addressing the following : o   Describe the target


Have you ever been involved in an effort to introduce a new product, service or technology in an organization? If so, share your experiences with the class. Provide the class wi

An industrial accident may be defined as "an occurrence. Which interrupts or interferes with the orderly progress or work in an industrial establishment." According to the Facto

The equivalent to competitive benefit in public services is Ans)  Best value

One rich seam of experimental data comes from meteorological measurements.  Thousands of measurements are recorded each day by the Australian Bureau of Meteorology (BoM). This assi