p1 - EC313-Fall 2010 Problem Set 1 (Updated 18 August 2010)...

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

View Full Document Right Arrow Icon
EC313-Fall 2010 Problem Set 1 (Updated 18 August 2010) Matt Turner When you write up your answers, your goal should be to (1) be correct, and (2) convince your reader that your answer is correct. Answers which do not achieve these goals will not be awarded full credit. To accomplish the second objective, it is helpful if your work is legible and if all steps are presented, possibly with a line of explanation. Problems 1. Define the following terms: Pareto optimality (PO), Social welfare functions, Tech- nological efficiency, Gross Domestic Product(GDP), Augmented Gross Domestic Product(AGDP). 2. An economy can produce consumption y from air quality x such that y ( 1 - x 2 ) , where x is required to be between zero and one. (a) Can you give an economic interpretation to the assumption that x lies in [ 0,1 ] ? (b) Is ( y , x ) = ( 1 2 , 1 2 ) technologically efficient? (c) If the price of air quality is zero and the price of consumption is positive, what combination of air quality and consumption maximizes the value of consump- tion? (d) Suppose that the price of consumption is 1 and the price of air quality is 2.
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.

Page1 / 2

p1 - EC313-Fall 2010 Problem Set 1 (Updated 18 August 2010)...

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