Assume:1) Two goods only: Good X and Good Y2) Two (groups of) individuals: Individual A and Individual B3) Utility function of Individual A: UA(Xa, Ya) = 300X4 –÷X + YA4) Utility function of Individual B: Ug (Xg, Yg) = 100XB –÷Xỉ + Ygen = (ež, e%) = (150,20000)eg = (ež,e%) = (400,0)5) Endowment for individual A:6) Endowment for individual B:Write down and explain market clearing conditions, budget constraints and optimization conditionsfor the two individuals.

The budget constraint is the boundary of the opportunity set—all possible combinations of…

1) Two goods only: Good X and Good Y 2) Two (groups of) individuals: Individual A and Individual B 3) Utility function of Individual A: UĄ(Xa,Y¼) = 300X, –· -X3 + Ya 4) Utility function of Individual B: Ug(Xg,Yg) = 100XB –;X3 + Yg - ea = (ež, e) = (150,20000) eg = (ež, e) = (400,0) 5) Endowment for individual A: %3D 6) Endowment for individual B: Write down and explain market clearing conditions, budget constraints and optimization conditions for the two individuals.

1) Two goods only: Good X and Good Y 2) Two (groups of) individuals: Individual A and Individual B 3) Utility function of Individual A: UĄ(Xa,Y¼) = 300X, –· -X3 + Ya 4) Utility function of Individual B: Ug(Xg,Yg) = 100XB –;X3 + Yg - ea = (ež, e) = (150,20000) eg = (ež, e) = (400,0) 5) Endowment for individual A: %3D 6) Endowment for individual B: Write down and explain market clearing conditions, budget constraints and optimization conditions for the two individuals.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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