PS12+homework - x = ± q S;q D;±;m ² x 1 =[5 5 97 5 x 2...

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Intermediate Microeconomics, 2010 Problem Set 12: Homework Due Mon/Tues, Feb. 22/23 1. Consider the following quasilinear economy: U ( m; q ) = m + 54 p q c ( q ) = 1 2 q 2 and Y = 100 (recall, negative consumption of m is allowed). (a) Find the competitive allocation: x = [ q ; q ; ; m ]. (b) Find the surplus S ( q ) at the competitive allocation. 2. Take some quasilinear economy. Argue why x = q S ; q D ; ; m cannot be an e - cient allocation if Y c q S > m + . Argue why x cannot be e cient if q D < q S . 3. For the economy from question 1: Check whether the following allocations are feasible, and/or pareto e
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Unformatted text preview: x = ± q S ;q D ;±;m ² . x 1 = [5 ; 5 ; ; 97 : 5], x 2 = [4 ; 5 ; 20 ; 0] ; x 3 = [5 ; 5 ; 20 ; 67 : 5], x 4 = [5 ; 4 ; 20 ; 0], x 5 = [6 ; 6 ; 20 ; 50 : 5] Multiple Choice 4. If an economist states that not enough of a good is being produced, she usually means that (a) not everyone can a²ord the good. (b) price exceeds marginal cost. (c) consumer surplus equals zero. (d) at equilibrium, some people who still wish to sell the good cannot ³nd a buyer. 1...
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