Question
Question: Remy's technology for producing omelettes (x) is represented by x= i + 1 where i is labor. He derives the following utility from his
Question:
Remy's technology for producing omelettes (x) is represented by x= i + 1 where i is labor. He derives the following utility from his consumptions of omelettes (x) and his labor (i):u (x,i) = x - 2i2.Assume Remy is the only consumer and producer of omelettes in his household. Suppose the price of omelettes is set at 1.
A. Show that Remy consumes 1.5 omelettes at the Pareto efficient allocation.
B. Find the market equilibrium allocation and wage rate
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Managerial Economics A Problem Solving Approach
Authors: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
4th edition
1305259335, 978-1305259331
