HW-4_REVISED

HW-4_REVISED - Economics 11, Winter 2011: HW #4 Due Tuesday...

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Due Tuesday March 1 at beginning of class 1. Total capital is K = 4 and total labor is L = 25. Production functions are x = K 1 / 2 L 1 / 2 y = K 1 / 2 L 1 / 2 Find and sketch the Production Possibility Frontier. 2. Total capital is K = 4 and total labor is L = 25. Production functions are x = K 2 / 3 L 1 / 3 y = K 1 / 3 L 2 / 3 Find and sketch the Production Possibility Frontier. 5. As in class, consider an economy with two production goods K,L (cap- ital and labor) and two consumption goods x,y . Consumption goods are produced from production goods according to the production func- tions x = min { K,L } y = K + L There are W workers, each endowed with 1 unit of L (labor) and noth- ing else; worker utility functions are u W ( x,y ) = xy . There is one capitalist who is endowed with C units of K capital and nothing else; the capitalist utility function is u C ( x,y ) = xy . Find the competitive equilibrium; your answer will involve
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HW-4_REVISED - Economics 11, Winter 2011: HW #4 Due Tuesday...

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