Problem set 2 - Econ 102B Summer Session II 2008 Problem Set 2(Due Wednesday August 13th 1 Consider an economy with one producer and one consumer

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

View Full Document Right Arrow Icon
Econ 102B, Summer Session II, 2008 Problem Set 2 (Due Wednesday, August 13 th ) 1. Consider an economy with one producer and one consumer. There are two goods: food (F) and labor (L). The production function is given by F p =3L p , and the consumer’s marginal rate of substitution of labor for food is given by MRS LF = F c / (24-L c ) [Note: Subscript p stands for commodities produced or used in production, and subscript c denotes commodities consumed or provided by the consumer]. The aggregate initial endowment bundle in this economy is (0, 0). Compute the competitive equilibrium for this economy [Think carefully: What is the budget constraint of the consumer and what are the attainability conditions for each commodity?]. 2. Consider a two-person pure exchange economy with two goods, A and B, and two consumers, 1 and 2. 1’s utility function is given by u=u(A 1 , B 1 ) and 2’s utility function is given by v=v(A 2 , B 2 ). The initial endowment bundles of 1 and 2 are given by (A 1 , B
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/06/2009 for the course ECON 102b taught by Professor Ozan during the Summer '08 term at UC Riverside.

Page1 / 2

Problem set 2 - Econ 102B Summer Session II 2008 Problem Set 2(Due Wednesday August 13th 1 Consider an economy with one producer and one consumer

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