2. Robinson's technology for producing coconuts, x, is represented by x = VI, where l is labour in hours per day. His pr
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- 2 Robinson S Technology For Producing Coconuts X Is Represented By X Vi Where L Is Labour In Hours Per Day His Pr 1 (269.39 KiB) Viewed 40 times
2. Robinson's technology for producing coconuts, x, is represented by x = VI, where l is labour in hours per day. His preferences for labour and coconuts are given by the utility function u(1,x) = x-1/2. Assume Robinson is the only consumer of coconuts, and the owner of the firm that produces coconuts. Suppose the price of coconuts is set at 1. (a) Calculate the Pareto efficient allocation of labour for this simple production economy. [20%] (b) Using part (a), calculate the Pareto efficient allocation of coconuts. (10%) (c) Find the equilibrium market prices labour. [20%] (d) Find the equilibrium profit level for the firm. (10%) (e) Explain why the indifference curves for Robinson are upward sloping and convex. [20%]