isi 2012

[ritu]

1.a library has to be located on the interval [0,1]there are three consumers a,b,c located on the interval at locations 0.3,0.4 and 0.6 respectively.if the library is located  at x,then a,b,c's utilities are given by:   -Ix-0.3I,-Ix-0.4I , -Ix-0.6I respectively.define a Pareto optimal location and examine whether the locations x=.1,.3,.4 are Pareto optimal or not?


2.there are two goods x and y.individual A has an endowment of 25 units of good x and 15 units of good y.individual B has endowments of 15 units of good x and 30 units of good y.the price of good y is re 1 no matter whether the individual buys or sells the good.the price of good x is re1 if the individual wishes to sell it.it is however,rs 3 if he wants to buy it,let Cx & Cy denote consumption of these goods.soppose that individua B chooses to consume 20 units of good x and individual A doesnt buy or sell any of the goods and chooses to consume her own endowment.could A AND B have the same preferences??????

[anon_econ]

hey i don't know the correct answers but i'll tell u what i think.
in the 1st one a pareto optimal location would be one from which u can't move closer to any of them w/o moving further away from at least 1 of them. so the pareto optimal points are [0.3,0.6].
in the 2nd one if u plot the budget constraints for both of them (they will be kinked at the endowment points), u'll see that warp is not being violated (at least that's what i got!). so they can have the same preferences.

plz help me with questions 15 & 16 if u know them!

[ISI agent]

Could you please explain how [0.3,0.6] is a pareto-optimal location?
If we move from 0.3 to 0.4, then A would be worse off than before. Wouldn't this be the case?

[duck]

Hi ISI Agent.. :)

Pareto Efficiency: You cannot make someone better off without making someone else worse off.
Now, if you move from 0.3 to 0.4 then A would be worse off and B,C would be better off. So, its pareto efficient. Similarly, for all the points in [0.3 , 0.6]

[Sumit]

@duck: plz explain 2nd one too...I didn't get it...??

[ISI agent]

Pareto-optimal questions always tend to twist my mind. But it's so much clear now. Thanks to you Duck! *Cheers*