Find the relationship between p1 and p2 in equilbirum

Assignment Help Econometrics
Reference no: EM131063281

Q1. General Equiliubrium-Pure Exchange Economy

Suppose A and B live in an exchange economy with two goods x1 and x2. Aowns 50 of both goods, and B own 250 of both goods.A's tastes are captured by the utility functionuA(x1,x2) = x2 + 50lnx1 and B's are captured by the utility functionuB(x1,x2) = x2 + 100lnx1.

a. Let the competitive equilibrium prices be p1 and p2 respectively.Derive both consumers' demand functions for both goods.

b. Find the relationship between p1 and p2 in equilbirum. How muchof each good will each consumer choose?

c. Suppose the government transfers 100 units of B's good 1endowment to A. How will the consumers' choices of good 1 in competitiveequilibrium change? Explain. (You should answer without repeating the utilitymaximization calculations.)

Reference no: EM131063281

Questions Cloud

Impact of transferring demand information : 1. What is the impact of transferring demand information across the supply chain? 2. How can supply chains meet the conflicting goals of different partners and facilities?
Accuracy of the network model : 1. How does aggregating customers and products affect the accuracy of the network model? 2. What type of network decisions do you feel are critical for your company? Why?
Calculate the stabilized income-value of the property : The NOI for a property is expected to be $100,000 in year 1 and increase 3 percent per year over a five-year holding period. The property value is expected to increased by a total of 15 percent over the same period. Investors require a 12 percent ove..
Why are volcanoes located where you describe : Mt St Helens produced an explosive eruption. What factors contribute to such a violent eruption? Other volcanoes like Hawaii are not as violent. Be sure to cite your references using correct APA formatting.
Find the relationship between p1 and p2 in equilbirum : Find the relationship between p1 and p2 in equilbirum. How muchof each good will each consumer choose?
Types of goals are important to strategy of organization : Explain why the 3 types of goals are important to the strategy of an organization. Explain why the different types of planning are important to the strategy of an organization. Examine the elements or factors involved in creating an effective strateg..
NOI will be level but the property value will increase : A property is expected to have NOI of $100,000 during the first year. Using a 10 percent yield rate (YO) and a five-year holding period, estimate the value under the following assumptions: a. NOI will be level but the property value will increase by ..
Describe the symptoms of eating disorder anorexia nervosa : Describe the symptoms of the eating disorder Anorexia Nervosa with the reference to the psychological changes that occur in the human brain. How do these psychological changes affect a person's self-perception
Planning and development into a new venture : How can a market analysis provide the concrete data required to steer planning and development into a new venture? If you were the CEO of a healthcare facility of your choice, what aspects of a recent market analysis would you use to pursue a comp..

Reviews

Write a Review

Econometrics Questions & Answers

  Evaluate the reliability of each of the following types

Letter received by auditors directly from bank stating that no indebtedness on part of client existed as of the balance sheet date.

  How much money will be in each account 6 years

Jim deposits $3,000 in a savings account that pays 6% interest compounded monthly. Three years later he deposits $4,000. Two years after the 4,000 deposit, he makes a final deposit of $6,000. Four years after the $6,000 deposit.

  What is the dollar value of the dead weightloss

q1=20 Q2=15 Q3=27 mARKET EQUILIBRIUM IS $45 price at A=85 C=5 F=59 G=31 what is the dollar value of the dead weightloss when output level q2 is produced what is the total surplus wen output q2 is being produced

  Mr jones has deposited his life savings of 70000 in a

mr. jones has deposited his life savings of 70000 in a retirement income plan with a local bank. the bank pays a. 10 b.

  What is the depreciated value of the tractor

a farmer buys a new tractor for $146,000 and assumes that it will have a trade-in value of $92,000 after 10 years. the farmer uses a constant rate of depreciation to determine the annual value of the tractor.

  Determine the rate of return on the investment

Sean Bell invested $10,000 on a blue chip stock five years ago and paid a commission of $90. He sold it today for $14,192.20 and paid the same commission, exactly 5 years and 4 months since the stock was bought.

  Calculate the opportunity cost for chris and andrew

calculate the opportunity cost for chris, andrew and stuart if they have to opt between travelling by bus, at 3 hours for $20 OR PLANE FOR $100 IN 30 MINUTES, onsidering that each earn $12, $5 and $10 an hour

  Why the product is important in the building process

Research a product from one of the 4 options listed and write a detailed report on the product. This report should explain how the component is built and designed; why the product is important in the building process

  What annual rate of interest is being earned on the fund

On january 1,2005, a person's saving account was worth $200,000. Every month thereafter, this person makes a cash contribution of $676 to the account. I f the funds is expected to be worth $400,000 on january 1,2010

  How much would cumulative spending increase as a result

To get an idea of how much those government rebate checks have spurred spending-and who's benefiting from the buying-business school professors Jonathan Parker (Northwes t ern) and Christian Broda (University of Chicago) analyzed the spending of 3..

  What is the risk-adjusted npv for each project

Your company has asked you to analyze two mutually exclusive projects for the coming year. Project A will have an initial outlay of $7,200. Project B will cost $6,800. Both projects will last for three years. On the basis of the information regardi..

  What is the net present value of the expansion project

Bruno's Lunch Counter is expanding and expects operating cash flows of $26,000 a year for 4 years as a result. This expansion requires $39,000 in new fixed assets. These assets will be worthless at the end of the project.

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