a) Find Karaโs optimal price per yoga class if she were to charge no club membership fee.

b) Find Karaโs optimal pricing strategy if she can choose to charge a price per yoga class, a monthly club membership fee, or some combination of both. Explain.

done

Seen

9 mins ago

## Gross Domestic Product as a measure

I am in need of help doing a discussion forum that involves gross domestic product. The response needs to be 250 words. I have attached the question below. If you have any questions or concerns please let me know.

## Aggregate demand and suly curve answer

Economics Assignment Help Partial Equilibrium: There are 20 consumers with quasi-linear utility functions for cheese.

Let xi be cheese, and mi be the numeraire. The catch is that for each unit of cheese produced,

there is also a significant carbon impact and this exacerbates global warming. Let h be the

carbon impact per unit of cheese produced. This is a non-depletable negative externality and

there is no market or well-defined property rights for carbon emissions. The utility function

is then, ui(xi

, mi

, hi) = ?i(xi

, h) mi

, where ?i(xi) = 18xi ?

x

2

i

6 ?

h

2

192 for xi ? 54 and

?i(xi) = 486 for xi > 54. There are 4 firms each with cost functions for producing cheese

cj (qj ) = j

24 q

3/2

j

.

(a) Solve for the aggregate demand curve and aggregate supply curve.

(b) Solve for the competitive equilibrium.

(c) Compute the Marshallian aggregate surplus (Hint: Donโt forget to account for the negative externality).

(d) Solve for the socially optimal quantity.

(e) Compute the Marshallian aggregate surplus under the social optimum.

(f) Calculate the Pigouvian tax.

2. General Equilibrium: There are two consumers, two firms, and two goods in this economy.

Consumers have the same utility function ui(xi) = x

3

1ix

2

2i

and the same endowments ?i =

(50, 0). Both firms have production function q2j = fj (z1j ) = 12z

1

2

1j

. The consumers each own

half of each firm.

(a) Solve for the supply function of the output for each firm (you donโt need to solve for

conditional factor demand).

(b) Solve for the profit function of each firm.

(c) Solve for consumer demand as a function of p and wi

.

(d) Solve for the competitive equilibrium.

3. Uncertainty: Two expected-utility maximizers live in an uncertain world. There are three

states of the world, {1, 2, 3}, which determine how much bread is available for the two consumers. Consumers have utility functions given by Ui(xi) = P

s Pr(s)ui(xsi). Both consumers

believe each state is equally likely.

(a) Suppose the endowments for the two consumers are ?1 = (0, 8, 7), and ?2 = (10, 2, 3). Let

the Bernoulli utility function of the first person be u1(xs1) = ln(xs1) and the Bernoulli

utility function of the second person be u2(xs2) = xs2. Solve for the Arrow-Debreu

equilibrium. (Hint: Think of the indifference curves of consumer 2.)

(b) Explain the intuition for your results in part (a).

2

Josh Tasoff

Dec 14, 2021

Econ 316

Consumer Theory and General Equilibrium

(c) Now suppose that this economy has 387 kinds of bread and there are many more consumers. So L = 387, not L = 1 as in the previous parts. There are still 3 states as

before, and there is an asset market prior to the resolution of uncertainty for French

batards (a kind of bread), which is used as a currency in all of the spot markets. There

exists a spot market for each of the 3 states. The asset market is characterized by the

return matrix,

R =

?

?

?

?

1 1 ?3 4

2 0 0 2

0 1 ?3 2

?

?

?

?

.

Without doing any math, can you say whether the Radner equilibrium in this economy

will be necessarily Pareto efficient? Why or why not?

(d) Continuing from part (c), now suppose the return matrix is instead

R =

?

?

?

?

1 1 2

0 1 1

0 0 3

?

?

?

?

.

and the prices of the assets are q1 = 7, q2 = 11, and q3 = 21. Solve for the price of a call

option on asset 3 with strike price 1

## Economics Question

PRIORITISE TOP TUTOR

E–x-a-m Time: 21st December, 9am (Sydney time)

Duration: 2 hrs

Question structure: The examination will consist of short answer conceptual questions and practical exercises/problem questions. The questions will be comparable to those covered in class; therefore, the best form of revision will be to work through lecture and tutorial questions, exercises and problems.

Topic covered: Similar to that screenshot attached