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 55 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
Great answer, keep it coming :)

lindahyatt42

  • Member
  • Posts: 322
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

When taking monoamine oxidase inhibitors, people should avoid a variety of foods, which include alcoholic beverages, bean curd, broad (fava) bean pods, cheese, fish, ginseng, protein extracts, meat, sauerkraut, shrimp paste, soups, and yeast.

Did you know?

An identified risk factor for osteoporosis is the intake of excessive amounts of vitamin A. Dietary intake of approximately double the recommended daily amount of vitamin A, by women, has been shown to reduce bone mineral density and increase the chances for hip fractures compared with women who consumed the recommended daily amount (or less) of vitamin A.

Did you know?

According to the American College of Allergy, Asthma & Immunology, more than 50 million Americans have some kind of food allergy. Food allergies affect between 4 and 6% of children, and 4% of adults, according to the CDC. The most common food allergies include shellfish, peanuts, walnuts, fish, eggs, milk, and soy.

Did you know?

The human body produces and destroys 15 million blood cells every second.

Did you know?

Elderly adults are living longer, and causes of death are shifting. At the same time, autopsy rates are at or near their lowest in history.

Visualization of heat exchange in an ectotherm and an endotherm. Visualization of heat exchange in an ectotherm and an endotherm.
Ecosystem goods and services and monetary values Ecosystem goods and services and monetary values
Countercurrent Exchange Countercurrent Exchange
The nuclear envelope is studded with pores, which allow exchange of materials The nuclear envelope is studded with pores, which allow exchange of materials
Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ... Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ...
Draw an Edgeworth box for two consumers over two goods Draw an Edgeworth box for two consumers over two goods
Video: Prone Position

For a complete list of videos, visit our video library