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Here are the answers:
A1. (d) None of the above A2. (c) (0, 25) A3 (c) (25/8, 25/8) |
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Sir pls explain 1 and 3... vandita On 26 Apr 2014 14:15, "Amit Goyal [via Discussion forum]" <[hidden email]> wrote:
Here are the answers: |
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This post was updated on Apr 26, 2014; 9:26am.
Explanation of Q1. The following example will rule out all the options:
Suppose the society consists of two individuals {1, 2} and there are four social alternatives {x, y, w, z} out of which only one will be implemented. Suppose preference of individual 1 is x P y P w P z i.e. 1 strictly prefers x to y, y to w, and w to z. And suppose preference of individual 2 is y P z P w P x i.e. 2 strictly prefers y to z, z to w, and w to x. Clearly x and y are pareto optimal but w and z are not. It can be easily seen that x is neither pareto superior to w, nor to z. Explanation of Q3. To solve for Nash equilibrium, first maximize wrt x1, the utility of 1: 5(x1 + x2)^{1/2} + (30 - x1) to get the best response function as: x1 = 25/4 - x2 and then maximize wrt x2, the utility of 2: 5(x1 + x2)^{1/2} + (30 - x2) to get the best response function as: x2 = 25/4 - x1 Solving the above two best response simultaneously, we see that one of the Nash equilibrium is (25/8, 25/8) |
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Thanks a lot sir. Sir can u pls suggest some reference or give any link where i can prepare for such general equilibrium questions.... vandita On 26 Apr 2014 14:40, "Amit Goyal [via Discussion forum]" <[hidden email]> wrote:
Explanation of Q1. The following example will rule out all the options: ... [show rest of quote] |
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I think past year exams are the best source.
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In reply to this post by Amit Goyal
Amit sir could you please explain Q2 as well.. because at any other points other than (0,25) also utility is higher On 26 Apr 2014 14:15, "Amit Goyal [via Discussion forum]" <[hidden email]> wrote:
Here are the answers: |
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For Q2 You maximize the following wrt x1 and x2:
10(x1+x2)^{1/2} + 60 - x1 - x2 and you get x1+x2 = 25 as set of all solutions. Thus, (0, 25) is one of the solution. |
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thanks a lot sir!!
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