Economy

Suppose there are two types of the consumers:?1(x,y)=x^0.25y^0.75and?2(?,?)=2?+?, where x is the consumption good and y and z aredifferent natural resources. Five consumers of type 1 own 10 units of resourcey each and 5 other consumers of type 1 own 10 units of resource z. Thereare also two consumers of type two, each of them owning one of the firms.

There are two competing firms in the economy. Firm 1 produces capital fromthe resource y with technology?=sqrt y. Firm 2 produces the consumptiongood from the capital and resource z with technology?=?^1/3?^1/3.

Policy:Per unit tax of 10% on using capital in production, whichis equally distributedas a lump sum subsidy to all consumers.

Economy Suppose there are two types of the consumers: u1(x, y) = x0'25 y0'75 and u2(x, z) = 2x + z , where x is the consumption good and y and z are different natural resources. Five consumers of type 1 own 10 units of resource y each and 5 other consumers of type 1 own 10 units of resource 2. There are also two consumers of type two, each of them owning one of the rms. There are two competitive rms in the economy. Firm 1 produces capital from the resource y with technology K = Firm 2 produces the 1 1 consumption good from capital and resource 2 with technology x = K5 25. Policy: Per unit tax of 10% on using capital in production, which is equally distributed as a lump sum subsidy to all consumers