The owner of a small chain of gasoline station in a large Midwestern town read an article in a trade publication stating that the own-price
September 3, 2020
good day . Suppose that GDP is $8 billion, taxes are $1.5 billion, private saving is $0.5 billion, and public saving is 0.2 billion. Assuming the…
September 3, 2020

Consider the 2 × 2 production model. Production functions are given by:

f1(z11, z21) = (z11)^α1 · (z21)^1−α1

f2(z12, z22) = (z12)^α2 · (z22)^1−α2

where αj ∈ (0, 1) for all j = 1, 2 and zij ≥ 0 for all i = 1, 2 and j = 1, 2.

Show mathematically that if the set of technologically efficient factor allocations (the Pareto set) ever cuts the diagonal of the Edgeworth Box, then it must coincide with the diagonal.

KM
Place Order