Good questions from DSE 2007 (Doubts)

classic Classic list List threaded Threaded
7 messages Options
Reply | Threaded
Open this post in threaded view
|

Good questions from DSE 2007 (Doubts)

Anakin Skywalker
CONTENTS DELETED
The author has deleted this message.
Reply | Threaded
Open this post in threaded view
|

Re: Good questions from DSE 2007 (Doubts)

Granpa Simpson
This post was updated on .
27) Consider (x^2+y^2)<=12 as the PPF, now agent 1 maximizes his utility where the PPF is tangent to the IC's of 1...by using this u will get x1=sqrt(8) and y1=2...clearly since both are <=3 so x1<=3 and y<=3 is also satisfied..thus for agent 2 it will be (3-sqrt(8),1)..hence option d.
28) In this allocation since agent 1 gets to choose his maximization bundle first so clearly when a=1, the slope of the PPF is tangent to 1's IC but at a=1, slope of IC of agent 2=1 while the slope of the PPC and agent 1's IC=sqrt(2)..so clearly this point is not Pareto efficient because the agent's IC's are not tangent at that allocation...even if there were no bounds on A's consumption the slope would still differ and would not be equal to 2..isnt it so..??this is because since A strictly consumes less than 3 for both x1 nd y1 the slope would be sqrt (2) anyhow..and cannot be equal to 1(given value of a)..so it should be option b..isnt it so..??kindly let me know where I am missing..??
29) To be in Pareto efficient (at the point obtained in Q1) the slope of IC(1)=slope of IC(2)=slope of PPF=sqrt(2)...so a=sqrt(2).
However plz check the answers..!!!!
 "I don't ride side-saddle. I'm as straight as a submarine"
Reply | Threaded
Open this post in threaded view
|

Re: Good questions from DSE 2007 (Doubts)

Granpa Simpson
In reply to this post by Anakin Skywalker
For the last part I am getting b as the answer..Dunno but calculating the utility of Agent 2 with option d i am getting 7.73 and with option b's allocation utility for 2= 7.74...so dunno where i am missing out. Wat about u..??
 "I don't ride side-saddle. I'm as straight as a submarine"
Reply | Threaded
Open this post in threaded view
|

Re: Good questions from DSE 2007 (Doubts)

Anakin Skywalker
CONTENTS DELETED
The author has deleted this message.
Reply | Threaded
Open this post in threaded view
|

Re: Good questions from DSE 2007 (Doubts)

Anakin Skywalker
In reply to this post by Granpa Simpson
CONTENTS DELETED
The author has deleted this message.
Reply | Threaded
Open this post in threaded view
|

Re: Good questions from DSE 2007 (Doubts)

ashutosh
In reply to this post by Granpa Simpson
28th It has to be c only. pareto Efficiency requires that there is no way of making one better off without making other worse off. It is clear from the allocation (and the given PPF constraint that Agent 1 or 2 can only be made better off at the expense of one another.

Reply | Threaded
Open this post in threaded view
|

Re: Good questions from DSE 2007 (Doubts)

ashutosh
For Q30

I think it should be c.
With the optimality conditions we are getting ans b. But b. does not lie in the feasible region. In option b. Agent 2 is consuming root 48/5 units of x. But root 48/5 (3.1) >3. So this should not be the answer. But c should be.

Someone please check. @subhayu @anirudha