Econ450sp15 Assignment 1 Answers - Econ450SP15 Assignment#1 Name_Answers Andy's utility level is U A C A where CA is the number of units of the good he

Econ450sp15 Assignment 1 Answers - Econ450SP15 Assignment#1...

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1 Econ450SP15 Assignment #1 Name_Answers____________ Andy's utility level is A A U C where C A is the number of units of the good he consumes while Brenda's utility level is given by the function 8 B B U C where C B is the number of units of the good she consumes. The economy has 100 units of a good to allocate between the two persons, so 100 A B C C . 1) Derive an equation for the utilities possibilities curve (UPC) for this economy. That is, derive an equation that expresses Brenda's utility as a function of Andy's utility. B U ___ 8 100 A U ___________________________________. Use the expression for the UPC you have given in 1) to answer the following: 2) Is it possible for both Andy and Brenda to both enjoy 64 units of utility each? Answer___No________________________________. 3) Suppose resources in the economy are distributed such that Andy has a utility level of 64 and Brenda has a utility level of 40. Is this an efficient (Pareto optimal) distribution of resources? Answer____No________________________________.
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