Tuesday, September 2, 2014

Excel HW on Efficiency and Equity Concepts - Due 9/10 at 11 PM

For some of you this homework will be entirely review.  For others, you may not have seen the Edgeworth Box before.  I'd appreciate learning which is your situation by mentioning it in the comments when you submit your key.

As with the other Excel Homework, if you have a question about the substance of what is going on, please post that as a comment to this post.


  1. For the fourth answer blank, we are asked to calculate the producer surplus, which is "the area under the price and above the supply curve up to the quantity traded." Should I be using the new price value I received in the sentence beforehand? If so, my PS area should be a small triangle, however excel is not accepting my response. Any ideas of how to fix this?

  2. You need to read the two paragraphs before the question and do so carefully. The producer surplus it asks for is other than what you have said it is. It want you to compute the area of some trapezoid.

  3. I got lost on 'Select a propsed alternative allocation for A that represents a Pareto Improvement over the initial allocation.' Can I get any hints on finding the value? Thank you.

    1. You should have already computer the Marginal Rate of Substitution for each agent. I suggest using an exchange ratio, you my prefer to call it a price, that is in between the two MRS and then for them to make a small volume trade at that price. I leave it to you to figure who buys X and sells Y and who sells X and buys Y.