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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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 ² cannot be an e±- cient allocation if Y ± c ³ 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±cient: Recall,
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: x = q S ;q D ;;m . 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 aord 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 nd a buyer. 1...
View Full Document

Ask a homework question - tutors are online