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ECON_104B_001_25S Chapter 16 Practice Problems -- Multiple-Choice
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In an Edgeworth box the line through all of the points that represent efficient allocations of two goods is called
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When analyzing an Edgeworth box, we look at all efficient allocations of two goods between two agents. The line that passes through every point representing such efficient allocations is known as the contract curve. This curve traces the set of ......Login to view full explanationLog in for full answers
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Question textIn an exchange economy, there are two people, A and B, and two goods, [math: x1]x_1 and [math: x2]x_2. Their respective utility functions and endowments are [math: uA(x1A,x2A)=min{2x1A,3x2A}]u^A(x_1^A,x_2^A) = \min\{2 x_1^A, 3 x_2^A\}[math: uB(x1B,x2B)=x1B⋅x2B]u^B(x_1^B,x_2^B) = x_1^B \cdot x_2^B[math: ωA=(6,10)andωB=(5,1)]\omega^A = (6, 10) \quad\text{and}\quad \omega^B = (5, 1) The minimum and maximum possible amounts of [math: x2A]x_2^A on the contract curve are (enter up to two decimal places if necessary): Minimum [math: x2A]x_2^A = Answer 1 Question 2[input] Maximum [math: x2A]x_2^A = Answer 2 Question 2[input] --- The minimum and maximum possible amounts of [math: x1A]x_1^A on the contract curve are (enter up to two decimal places if necessary): Minimum [math: x1A]x_1^A = Answer 3 Question 2[input] Maximum [math: x1A]x_1^A = Answer 4 Question 2[input]
The input contract curve represents:
Identify the truthfulness of the following statements. I. The contract curve must contain the initial endowment point. II. All points on the contract curve are Pareto efficient.
If each of the two players represented in an Edgeworth box has Cobb-Douglas indifference curves, then the contract curve will be
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