This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Andrew and Sarah are two traders in a pure exchange economy with two goods, Bikes and TVs. Suppose ... (Read 21 times)

luvbio

  • Hero Member
  • *****
  • Posts: 623
on: Jul 1, 2018
Andrew and Sarah are two traders in a pure exchange economy with two goods, Bikes and TVs. Suppose Andrew has preferences given by: U(B,T) = BT where B is the number of bikes and T is the number of TVs.
 
  Sarah only derives utility from TV, so her utility function can be given by: V(B,T) = T Describe the contract curve.

Question 2

You invest an amount today for four years that pays 6 annually. The bank compounds annually. At the end of the four years you will have 150. What amount must you invest today?
 
  A) 148.81
  B) 138.81
  C) 128.81
  D) 118.81


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Yixagurpuldink

  • Sr. Member
  • ****
  • Posts: 341
Reply #1 on: Jul 1, 2018
Answer to Question 1

The contract curve will be points where Sarah consumes zero Bikes. Notice that any bundle in which Sarah's consumption of TVs is positive is Pareto dominated by the same bundle but with the quantity of Bikes reduced to zero.

Answer to Question 2

D


luvbio

  • Member
  • Posts: 623
Reply 2 on: Jul 1, 2018
Thanks for the timely response, appreciate it

patma1981

  • Member
  • Posts: 292
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

Alzheimer's disease affects only about 10% of people older than 65 years of age. Most forms of decreased mental function and dementia are caused by disuse (letting the mind get lazy).

Did you know?

You should not take more than 1,000 mg of vitamin E per day. Doses above this amount increase the risk of bleeding problems that can lead to a stroke.

Did you know?

Asthma is the most common chronic childhood disease in the world. Most children who develop asthma have symptoms before they are 5 years old.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

The four ways in which animals exchange heat with the environment are radiation, evaporation, convec The four ways in which animals exchange heat with the environment are radiation, evaporation, convec
General Andrew Jackson, on the horse, exhorts his men to throw back the advancing British; they succ General Andrew Jackson, on the horse, exhorts his men to throw back the advancing British; they succ
The lower respiratory tract and the process of gas exchange. The lower respiratory tract and the process of gas exchange.
Japan’s Economy and Society Japan’s Economy and Society
Consequences of a double exchange occurring between two nonsister chromatids Consequences of a double exchange occurring between two nonsister chromatids
Video: Genetic distance between human groups

For a complete list of videos, visit our video library