competitive equilibrium

8. Halloween is an old American tradition. Kids go out dressed in costume and neighbors give them candy when they come to the door. Spike and Cinderella are brother and sister. After a long night collecting candy, they sit down as examine what they have. Spike finds that he has 40 candy bars and 20 packs of gum. His sister finds she has 30 candy bars and 40 packs of gum. Spike likes candy bars exactly twice as much as gum and would always be willing to trade two packs of gum for one candy bar. Cinderella, on the other hand, likes gum exactly twice as much as candy bars and would always be willing to trade two candy bars for one pack of gum. 

a. Illustrate this situation in an Edgeworth box. Let Spike’s origin be in the lower left, and Cinderella’s be in the upper right hand corner. Put candy bars on the horizontal axis and gum on the vertical. 

b. Now draw in indifference curves for the two agents that reflect the description given above. Indicate the endowment point, and the contract curve. Illustrate a competitive equilibrium. Is there more than one competitive equilibrium? 

#10. Ken McSubstitute and Ron O’Complement were flying to a fast food festival in Fiji when an unexpected storm forced their plane to ditch in the middle of the Pacific. Miraculously, they are washed up on a desert island. Ken finds that he has only 5 slightly wet hamburgers and 15 orders of fries in his pockets. Ron discovers he has 15 hamburgers and 5 orders of fries. Ken only cares about how much he gets to eat. His utility function is: Us(H,F) = H+F. On the other hand, Ron believes that it is uncivilized to eat hamburgers without french fries or french fries without hamburgers. His utility function is: Uc(H,F) = min(H,F). 

a. In an Edgeworth box, show the endowment point, the Pareto Opimal Allocations, and the competitive equilibrium 

b. Is the competitive equilibrium Pareto Optimal? 

   Related Questions in Mathematics

  • Q : Statistics math Detailed explanation of

    Detailed explanation of requirements for Part C-1 The assignment states the following requirement for Part 1, which is due at the end of Week 4: “Choose a topic from your field of study. Keep in mind you will need to collect at least [sic] 3- points of data for this project. Construct the sheet y

  • Q : Formal Logic It's a problem set, they

    It's a problem set, they are attached. it's related to Sider's book which is "Logic to philosophy" I attached the book too. I need it on feb22 but feb23 still work

  • Q : Problem on Prime theory Suppose that p

    Suppose that p and q are different primes and n = pq.

    (i) Express p + q in terms of Ø(n) and n.

    (ii) Express p - q in terms of p + q and n.

    (iii) Expl

  • Q : Area Functions & Theorem Area Functions

    Area Functions

    1. (a) Draw the line y = 2t + 1 and use geometry to find the area under this line, above the t - axis, and between the vertical lines t = 1 and t = 3.

    (b) If x > 1, let A(x) be the area of the region that lies under the line y = 2t + 1 between t

  • Q : Law of iterated expectations for

     Prove the law of iterated expectations for continuous random variables.

    2. Prove that the bounds in Chebyshev's theorem cannot be improved upon. I.e., provide a distribution that satisfies the bounds exactly for k ≥1, show that it satisfies the bounds exactly, and draw its PDF. T

  • Q : Mathematical Method for Engineers The

     The function is clearly undefined at , but despite all of this the function does have a limit as approaches 0. a) Use MATLAB and ezplot to sketch for , and use the zoom on facility to guess the . You need to include you M-file, outp

  • Q : Maths A cricketer cn throw a ball to a

    A cricketer cn throw a ball to a max horizontl distnce of 100m. If he throws d same ball vertically upwards then the max height upto which he can throw is????

  • Q : Linear programming model of a Cabinet

    A cabinet company produces cabinets used in mobile and motor homes. Cabinets produced for motor homes are smaller and made from less expensive materials than those for mobile homes. The home office in Dayton Ohio has just distributed to its individual manufacturing ce

  • Q : What is limit x tends to 0 log(1+x)/x

    What is limit x tends to 0  log(1+x)/x to the base a?

  • Q : Who had find Monte Carlo and finite

    Who had find Monte Carlo and finite differences of the binomial model?