Second Fundamental Theorem of Welfare Economics a. Describe the theorem, making sure that you define clearly the terms used in the description (e.g. if you use the term “efficient” you have to describe what this means). b. Explain why the theorem implies that there is no intrinsic trade-off between efficiency and interpersonal equity. c. Demonstrate your argument using an Edgeworth box, making sure that you describe all the elements of the box appropriately.

Second Fundamental Theorem of Welfare Economics a. Describe the theorem, making sure that you define clearly the terms used in the description (e.g. if you use the term “efficient” you have to describe what this means). b. Explain why the theorem implies that there is no intrinsic trade-off between efficiency and interpersonal equity. c. Demonstrate your argument using an Edgeworth box, making sure that you describe all the elements of the box appropriately.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.9P

See similar textbooks

Similar questions

1. Second Fundamental Theorem of Welfare Economicsa. Describe the theorem, making sure that you define clearly the terms used in thedescription (e.g. if you use the term “efficient” you have to describe what this means).b. Explain why the theorem implies that there is no intrinsic trade-off between efficiencyand interpersonal equity. c. Demonstrate your argument using an Edgeworth box, making sure that you describe allthe elements of the box appropriately.
What assumptions are necessary for supposing that individual preferences can be inferred and valued from the choices that individuals make?give a reason
One of the following findings of the behavioral economics is widely adopted by the policy makers across the world Humans place greater welfare weights on A avoiding loss than experiencing equivalent gain. People prefer to cut economic loss more than their social loss. Policies aimed at enhancing people's gains C have been found to be more effective than the policies aimed at minimising people's losses Mankind behaves rationally irrespective of D their socio-psychological situations.
5. Sheila and Bruce are taking a canoe trip. Sheila brought 10 boxes of peanuts (x) and 15 bags of chips (y). Sheila's utility function is U*(x,y) = lnvx*+ Invy°. Bruce also brought 20 boxes of peanuts and 5 bags of chips. Bruce's utility function is UB(x.y) = min[x', y'I. a) Illustrate the endowment point and draw a sample set of indifference curves through the endowment point. b) If Sheila and Bruce trade what will be the pattern of mutually beneficial trade? c) If the terms of trade are the number of bags of chips (y) per box of peanuts (x) then what is the largest value that these terms can be for a mutually beneficial trade in this economy? d) Find one mutually beneficial trade where the terms of trade are 1 bag of chips (y) per 2 boxes of peanuts (x). Suppose that Sheila and Bruce set up two competitive markets for peanuts and chips. Below you will show that if the price of peanuts (x) is $1 and the price of chips (y) is $2 then the markets for both peanuts and chips will clear.…
Good Y Use this figure of a feasible frontier and a set of an agent's indifference curves to answer the following three questions: A B C D E Good X shot 2024-... i Q Q Economists use the symbol ">" to mean "is preferred to". For example, if for Ash JK, it means that they prefer J to K. Which of the responses below correctly indicates this agent's preferences over the five labeled points on the feasible frontier, listed from most preferred to least preferred? OD C B E A OC B D A E OB A C D E OE D C B>A OA B C D E
True/false, no need to explain. (a) There is no perfect way to aggregate individual preferences to a single "social" preferences (b) “Before enacting a policy, try to put ourself in the shoes of those who will be negatively impacted mostly.” This sentence is best to summarise the Benthamite welfare function (c) If a person's utility is simply a function of her own consumption, and the welfare function is derived from individuals utility function, then we will not have consumption externalities. (d) An allocation cannot be both equitable and Pareto efficient.
. Show that Cobb-Douglas preferences are homothetic preferences
Explain why the Fundamental Theorem of Welfare Economics implies that there is no intrinsic trade-off between efficiency and interpersonal equity. Demonstrate the argument using two Edgeworth box, making sure that you describe all the elements of the box appropriately.
What is the difference between a Social Welfare Function and Social Choice Rule? Explain whether requiring a Social Choice Rule rather than a Social Welfare Func- tion successfully resolves the paradoxical results in social choice theory.
Pls help with below homework. Assume that the consumers A and B want to maximize utility, that they consume the same goods price ration. What decision rule would they employ, and how would this relate to the Welfare Frontier? (Assume that the goods are X and Y).
When using the social ecological model, which of the following would be considered part of the "exosystem" of influence on an individual's physical activity? O Personal factors O public policy O Institutional factors O Exosystem does not exist in the social ecological model If you have a client who wants to work out on his own, which of the following method of prescribing exercise intensity you should recommend to be more accurate? O Rating of perceived exertion (RPE) O Talk test O % Age predicted HRmax O % Heart rate reserve (measured)
What are the 4 basic assumption of individual preferences?