midterm1

midterm1 - Econ 440 March 1 Peter Norman Midterm 1 1...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Econ 440 March 1 Peter Norman Midterm 1 1. Consider an economy with two goods, x and y and two agents, A and B: Suppose that the agents are endowed with e A = & e A x ; e A y ¡ and e B = & e B x ; e B y ¡ units of the two goods. Also suppose that preferences over di/erent consumption bundles are represented by utility functions u A ( x; y ) and u B ( x; y ) respectively. (a) De&ne a competitive equilibrium. (b) De&ne a Pareto optimal allocation. (c) True¡False: All competitive equilibria are Pareto Optimal. Explain using a wisely chosen graph. No credit unless explanation satisfactory. (d) True¡False: All Pareto optimal allocations are competitive equilibria. Explain using a wisely chosen graph. No credit unless explanation satisfactory. (e) Suppose instead that preferences are given by u A & x A ; x B ; y ¡ and u B & x A ; b B ; y ¡ : Would this a/ect the answers above? Why? Why not? No credit unless answer contains a reasonable explanation....
View Full Document

This note was uploaded on 11/02/2008 for the course ECON 440 taught by Professor Peternorman during the Spring '08 term at UNC.

Page1 / 2

midterm1 - Econ 440 March 1 Peter Norman Midterm 1 1...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online