Solved: Tom and Jerry are roommates They spend a total

of
Tom and Jerry are roommates They spend a total of

Tom and Jerry are roommates. They spend a total of 80 hours a week together in their room.
Tom likes loud music, even when he sleeps. His utility function is UT (CT,M) = CT + M, where
CT is the number of cookies he eats per week and M is the number of hours of loud music per
week that is played while he is in their room. Jerry hates all kinds of music. His utility function is
U(CJ,M) = CJ ? M2/12. Every week, Tom and Jerry each get two dozen chocolate chip cookies
sent from home. They have no other source of cookies. We can describe this situation with a
box that looks like an Edge worth box. The box has cookies on the horizontal axis and hours of
music on the vertical axis. Since cookies are private goods, the number of cookies that Tom
consumes per week plus the number that Jerry consumes per week must equal 48. But music in
their room is a public good. Each must consume the same number of hours of music, whether
he likes it or not. In the box, let the height of a point represent the total number of hours of
music played in their room per week. Let the distance of the point from the left side of the box
be “cookies for Tom” and the distance of the point from the right side of the box be “cookies for
Jerry.”

(a) Suppose the dorm’s policy is that you must have your roommate’s permission to play
music. The initial endowment in this case denotes the situation if Tom and Jerry make no deals.
There would be no music, and each person would consume 2 dozen cookies a week. Mark this
initial endowment on the box above with the label A. Use red ink to sketch the indifference curve
for Tom that passes through this point, and use blue ink to sketch the indifference curve for
Jerry that passes through this point. Use blue ink to shade in the points representing situations
that would make both roommates better off than they are at point A.

(b) Suppose, alternatively, that the dorm’s policy is “rock-n-roll is good for the soul.” You don’t
need your roommate’s permission to play music. Then the initial endowment is one in which
Tom plays music for all of the 80 hours per week that they are in the room together and where
each consumes 2 dozen cookies per week. Mark this endowment point in the box above and
label it B. Use red ink to sketch the indifference curve for Tom that passes through this point,
and use blue ink to sketch the indifference curve for Jerry that passes through this point. Given
the available resources, can both Tom and Jerry be made better off than they are at point B?

Tom and Jerry are roommates They spend a total of

ANSWER
https://solvedquest.com/tom-and-jerry-are-roommates-they-spend-a-total-of/

Reach out to freelance2040@yahoo.com for enquiry.

 Reach out to freelance2040@yahoo.com for enquiry.
Powered by TCPDF (www.tcpdf.org)