Construct an appopriately sized edgeworth box for them

Assignment Help Business Economics

Reference no: EM131109464

There are only two consumers: Bill and Ted, and two goods: apples and bananas. Bill and Ted like apples and oranges. Bill is always willing to subsitute 1 apple for 3 bananas. So Bill's utility function is UB = 3A + B. Ted is always willing to subsitute 1 apple for 2 bananas. So Bill's utility function is UT = 2A + B. Assume that there are 12 apples and 24 bananas to split between Bill and Ted.

a) Construct an appopriately sized Edgeworth box for them.

b) Draw indifference curves for both Bill and Ted in your Edgeworth box in Part (a). Draw Bill's indifference curve with thick lines, and Ted's with thin lines (or you can use lines with different colors to show Bill's and Ted's indifference curves)

c) Assume that initially Bill has 3 apples and 10 bananas. How many apples and bananas does Ted have?

d) Is the initial allocation in part (c) pareto efficient? Explain

e) Find the constraint curve.

Reference no: EM131109464

Questions Cloud

Private practice needs a van to carry crew and equipment : A construction manager just starting in private practice needs a van to carry crew and equipment. She can lease a used van for $3867 per year, paid at the beginning of each year, in which case maintenance is provied. Alternatively, she can buy a used..

Discuss the problems of regional integration agreements : Europe struggled with high levels of violence that raged for most of the first half of the twentieth century. In spite of that, Europe has achieved the most advanced level of integration of any regional grouping. Discuss the problems of regional inte..

Two most commonly used and analyzed financial statements : What are the two most commonly used/analyzed financial statements? Explain what each of these are, what info they contain, and why they are significant in evaluating the overall "health" of a company.

Construct an appopriately sized edgeworth box for them : There are only two consumers: Bill and Ted, and two goods: apples and bananas. Bill and Ted like apples and oranges. Bill is always willing to subsitute 1 apple for 3 bananas. Construct an appopriately sized Edgeworth box for them. s the initial allo..

Find recent evidence in the wall street journal : Find recent evidence in the Wall Street Journal and other business publications on how companies are expanding the use of techniques described in the opening case to ubderstand and impact character behavior.

Describe the condition of the commercial banking system : Assume that the following data describe the condition of the commercial banking system: Total Reserve: $80 billion Transaction deposits: $700 billion Cash held by public: $300 billion Reserve required: 0.10. How large is the money supply (M1)?. Are t..

The demand equation for baseball bats : Currently, the demand equation for baseball bats is Q=300-5P. the current price is $15 per bat. is this the best price to charge in order to maximize revenues? If not, indicate what price you should charge and quantity that you should produce in orde..

Estimated using the multiple linear regression model : Discuss which economic theories or relationships you have studied up until now (not just in this class – in all your economics classes) that could be estimated using the multiple linear regression model. Explain your rationale.

User Account

All Pages