final grade. A Comprehensive Problem You are the only economist on a .docx - final grade A Comprehensive Problem You are the only economist on a remote

final grade. A Comprehensive Problem You are the only economist on a .docx

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final grade. A Comprehensive Problem You are the only economist on a remote island and asked by the policy makers to provide some insight on the economy of the island. The inhabitants consume only two kinds of goods, pineapples (z) and fish (r2). There are n inhabitants. Every consumer has income m and a preference ordering represented by the utility function U (I1, I2) = x2 The price of pineapples is pi and the price of apples is p. The corresponding marginal utilities are given by 1 MU -1/2 1/2 21 1 MU 2 1/2-1/2 The farmers who produce pineapples have the technology given by i where r1 is the quantity of pineapples produced, K is the amount of land used, L is the amount of labour used in production and A is the productivity parameter. The cost of a unit of land is the rental rate r and the cost of a unit of labour is the wage rate w. There are t farmers currently producing pineapples in a perfectly competitive market. Each farmer currently uses Ko units of land and in the short-run, it is prohibitively expensive to change the amount of land utilized. The
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  • Spring '17
  • DEBORAHGOLDSMITH

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