In an exchange economy A's utility is given by UA = x + y and B's by UB = min[x, 2y]. The initial endowment for A is x = 10, y = 8 and for B, x = 8, y = 4 . To reach the contact curve, these individuals must:
a. trade 1x for 1y.
b. trade 2x for 1y.
c. trade 1x for 2y.
d. do nothing, since they are already on the contract curve.
d
Economics
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Luxury brands like designer sun glasses are goods that may exhibit snob effects. Suppose this is true, and the price for a particular brand increases. What happens to the component changes in the quantity demanded?
A. Pure price effect is positive, snob effect is negative. B. Pure price effect and snob effect are positive. C. Pure price effect is negative, snob effect is positive. D. Pure price effect and snob effect are negative.
Economics
What is the difference between scarcity and a shortage?
What will be an ideal response?
Economics