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Widgetland has 60 workers. Each worker can produce 4 widget(s) or 4 wadget(s). Each resident in Widgetland currently consumes 2 widget(s) and 2 wadget(s). Wadgetland also has 60 workers. Each can produce 3 widget(s) or 12 wadget(s). Wadgetland’s residents consume 1 widget(s) and 9 wadget(s). Is there a basis for trade? If so, offer the countries a deal they can’t refuse.
a. Is there a basis for trade?
b. To maximize consumption, Widgetland should produce ____ widgets.
c. To maximize consumption, Wadgetland should produce ____ wadgets.
d. Widgetland needs ____ wadgets and has ____ widgets to trade for them.
e. Wadgetland needs ____ widgets and has ____ wadgets to trade for them.
Matt spends $40 per month on peanut butter (good x, measured in jars) and bread (good y, measured in loaves). He wishes to consume the goods according to the following utility function: u(x,y) = min(2x,y).
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