Plot the contract curve, Strategic Management

Assignment Help:

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.


Related Discussions:- Plot the contract curve

Free cash flows, Free cash flows can be arrived at by using the following c...

Free cash flows can be arrived at by using the following calculation Operating profit before interest and tax (PBIT) +                                              Depreciati

Sanlam, write an essay of approximately 1500 words in which you critically ...

write an essay of approximately 1500 words in which you critically analyse and evaluate the value innovation strategy that sanlam opted for in their 2009 blue star financial advise

Evaluating the performance of divisions, Q. Evaluating the performance of d...

Q. Evaluating the performance of divisions? The controllability principle is concerned with assessing performance based upon measures that can be controlled only by a manager a

Explain approaches to it strategy development, Question: (a) What do y...

Question: (a) What do you meant by the following terms: • Information System (IS) strategy, • Information Technology (IT) strategy? (b) Explain five approaches to IT st

What are the four types of strategic control, QUESTION 1 The most impor...

QUESTION 1 The most important purpose of strategic control is to help Top Management achieve organizational goals through monitoring and evaluating the strategic management pro

Management decision - making case problem, Louise Nance had working on the ...

Louise Nance had working on the assembly line of the Jackson Manufacturing Company for about six months. During recent weeks, her supervisor, Ben Miller, noticed that her productio

Problems of profit based measures, Problems of profit based measures -...

Problems of profit based measures -  Absolute profit measures ignore the amount of investment in the division e.g. does not look at profit relative to capital employed. -

Miss, how much for a dissertation 15,000 words due in June with the topic i...

how much for a dissertation 15,000 words due in June with the topic is Strategic management? thanks

What is the net cash flow for each year, Net Present Value (NPV) analysis i...

Net Present Value (NPV) analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflow and outflow to the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd