Calculate price of good-will lead to competitive equilibrium

Assignment Help Business Economics
Reference no: EM131007098

Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 3 units of good X and 8 units of good Y. Consumer B is given an initial endowment of 3 units of good X and 4 units of good Y.
Consumer A’s utility function is given by: UA(X,Y) = X4*Y,
And consumer B’s utility function is given by UB(X,Y) = X*Y.
Therefore, consumer A’s marginal utilities for each good are given by:
MUX = 4X3Y
MUY = X4
Also, consumer B’s marginal utilities for each good are given by:
MUX = Y
MUY = X
Suppose the price of good Y is equal to one. Calculate the price of good X that will lead to a competitive equilibrium.

Reference no: EM131007098

Questions Cloud

How the marginal rate of technical substitution falls : Illustrate graphically and explain in words how the marginal rate of technical substitution falls as you move down an isoquant curve. Look at the figure Price Controls. A price ceiling has been imposed at point d. Identify the areas that correspond t..
If the accounting profit for a firm is negative : If the accounting profit for a firm is negative, the:
What is time budget constraint-marginal utility of exercise : Bob is awake for 15 hours a day and divides that time between hours of exercise, x, and hours of study, s. Bob’s preferences are represented by the following utility function. What is Bob's time "budget constraint"? What is Bob's marginal utility of ..
Use to be elected mayor of a university town : One strategy I might use to be elected mayor of a university town is to place a binding price ceiling on rent for student apartments. What will happen if I get elected and am able to pass such a law?
Calculate price of good-will lead to competitive equilibrium : Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 3 units of good X and 8 units of good Y. Consumer B is given an initial endowment of 3 units of good X and 4 units of good Y. Suppose the..
Trademark law does not allow the holder to sell trademark : Trademark law does not allow the holder to sell a trademark independent of the good to which it is attached. Thus, Coca-Cola cannot sell its use of the trademark "Coke" to another producer of cola syrup that mark may be sold only with the syrup produ..
Steady state of the solow model with population growth : Draw a well-labeled graph that illustrates the steady state of the Solow model with population growth. Use the graph to find what happens to steady-state capital per worker and income per worker in response to each of the following exogenous chang..
Show a power press and identify the location of each item : Search online at http://www.osha.gov and from 29 CFR 1910.211 Definitions, define the following power press terms: brake, clutch, two-hand control device, die, foot pedal, pinch point, point of operation. Regulations for power presses are presente..
What defenses will the bank assert : Is the bank liable for the janitor's negligence? Be sure to go through all of the elements. Additionally, note that under the doctrine of respondeat superior the bank WILL be liable for any potential negligence of the janitor employee. What defe..

Reviews

Write a Review

Business Economics Questions & Answers

  Two commodities and a consumer prefers

Suppose that there are two commodities and a consumer prefers more to less of each good. If the consumer has transitive preferences, can her indifference curves cross?

  Using edge worth-box-draw a pareto-optimal allocation

Pete and Paul live in an exchange economy (so we can use the Edge worth-box). The economy has endowment of 10 cheese slices and 10 crackers. Is Pete consuming 3 crackers and 5 cheeses slices a Pareto-optimal allocation? If not, how could you rearrang..

  Compute the equilibrium level of income for the open economy

Compute the equilibrium level of income for the open economy aggregate expenditure model.

  Constructive eviction and the implied warranty of habbit

Constructive Eviction and the Implied Warranty of Habitability

  Part of the navigation acts

Demand-Supply Analysis and the American Revolution a. Before the American Revolution, the British government required that all imports to the colonies from outside the British Empire were first shipped to England (part of the Navigation Acts). A Bost..

  Benefits to the environment of recycling

AMS recently instituted an in-house recycling program. The benefits of this program include not only the benefits to the environment of recycling but also the goodwill generated by AMS’s leadership in this area. What level of Q maximizes net benefits..

  About the measuring performance

Measuring performance: If public opinion surveys show that the majority of Americans regard inflation as a more serious threat than unemployment:

  Individual industry reforms in australia

How companies and countries are becoming specialised in certain industries to compete and expand their businesses. Compare Australia with any other two countries

  What is meaning of the rhetorical device called a stereotype

What is grouping ambiguity? If a claim is made by a disinterested party, we know that. What is the meaning of the rhetorical device called a stereotype?

  Issues regarding diminishing marginal returns

how must you consider the issues regarding diminishing marginal returns and economies of scale.

  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..

  Differentiate between real and nominal gdp

Let's take a look at all the posts above on the definition of GDP. Those definitions of GDP usually assume constant prices even though there is no clear reference to prices in the definition. That is why economists usually like to differentiate betwe..

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