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2008년 이인호교수 미시 기말 기출.pdf

2008년 이인호교수 미시 기말 기출.pdf - 212.201...

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212.201 Microeconomics 2008 Fall Prof. In Ho Lee Final Examination (December 11) 1. Pam and Susan are neighbors. Pam likes loud music, and Susan dislikes it. They each have $60. Let x M denote Pam°s consumption of other goods, and let x H denote Susan°s. Let d denote the decibel level of the music. Pam and Susan have the following preferences: u M ( x; d ) = x 1 2 M d 1 2 u H ( x; d ) = x 1 2 H (100 ° d ) 1 2 (a) Assume that Pam has the right to play her music as loud as she wants. Draw Edgeworth box, marking the endowment point and the contract curve. (When drawing the box, assume that Susan°s speakers can produce a maximum of 100 decibels, and put Pam°s origin in the lower left corner.) Is this endowment Pareto e¢ cient? (b) If they use the price mechanism to reach Pareto e¢ cient allocation, what will be the decibel level? What will be the price of decibel, and who will pay it to who? (c) What is the endowment and the equilibrium decibel level if Susan has the right to a quiet environment instead?
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