--%>
Assignment Help - homework help

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 : Problem on mixed-strategy equilibrium

    Assume three Offices (A, B, & C) in downtown,  simultaneously decide whether to situate in a new Building. The payoff matrix is illustrated below. What is (are) the pure stratgy Nash equilibrium (or equilibria) and mixed-strtegy equilibrium of the game?

    		•
  • Q : Abstract Algebra let a, b, c, d be

    let a, b, c, d be integers. Prove the following statements: (a) if a|b and b|c. (b) if a|b and ac|bd. (c) if d|a and d|b then d|(xa+yb) for any x, y EZ

    		•
  • Q : Use MS Excel to do the computations

    Select a dataset of your interest (preferably related to your company/job), containing one variable and atleast 100 data points. [Example: Annual profit figures of 100 companies for the last financial year]. Once you select the data, you should compute 4-5 summary sta

    		•
  • Q : First-order formulas over the

    Consider the unary relational symbols P and L, and the binary relational symbol On, where P(a) and I(a) encode that a is apoint and a (sraight) line in the 2-dimensional space, respectively, while On(a,b) encodes  that a is a point, b is a line, and o lies on b.

    		•
  • Q : Problem on Maple (a) Solve the

    (a) Solve the following  by: (i) First reducing the system of first order differentiat equations to a second order differential equation. (ii) Decoupling the following linear system of equa

    		•
  • Q : Bolzano-Weierstrass property The

    The Bolzano-Weierstrass property does not hold in C[0, ¶] for the infinite set A ={sinnx:n<N} : A is infinite; Show that has no “ limit points”.

    		•
  • Q : Problem on Fermats method A public key

    A public key for RSA is published as n = 17947 and a = 3. (i) Use Fermat’s method to factor n. (ii) Check that this defines a valid system and find the private key X.

    Q : Problem on Nash equilibrium In a

    In a project, employee and boss are working altogether. The employee can be sincere or insincere, and the Boss can either reward or penalize. The employee gets no benefit for being sincere but gets utility for being insincere (30), for getting rewarded (10) and for be

    		•
  • Q : Budgeted cash disbursements The ABC

    The ABC Company, a merchandising firm, has budgeted its action for December according to the following information: • Sales at $560,000, all for cash. • The invoice cost for goods purc

    		•
  • Q : Probability assignments 1. Smith keeps

    1. Smith keeps track of poor work. Often on afternoon it is 5%. If he checks 300 of 7500 instruments what is probability he will find less than 20substandard? 2. Realtors estimate that 23% of homes purchased in 2004 were considered investment properties. If a sample of 800 homes sold in 2

    		•