Questions
ECON_104B_001_25S Lecture Quiz #1
Single choice
Consider two consumers, A and B, who consume two goods, x and y. Assume that the utility function for A is and the utility function for B is . Consumer A is endowed with 10 units of x an 10 units of y. Consumer B is endowed with 10 units of x and 40 units of y. What is the equation for the contract curve from the point of view of Consumer A.
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The provided question text appears incomplete for deriving a contract curve. Key items that are missing and prevent completion are:
- The explicit utility functions for Consumer A and Consumer B. Without U_A(x, y) and U_B(x, y), we cannot compute the marginal utilities or the marginal rate of substitution (MRS) for either consumer, which are essential to form the contract curve.
- Any stated or implied form of the endowments is partially given, but the exact endowment vectors for......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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