9 1. A society consists of two consumers who obtain utility from consuminggoods a and b. Their initial endowments are (8, 5) and (1, 1), respectively.Their utility functions are U1 = a,bı and U2 = azb2.a) Find the Walrasian equilibrium.b) Now assume you are a benevolent dictator and want to maximiseW = min(U1, U2). Find the optimal allocation of goods.

Initial Endowment are (8,5) and (1,1) U1 = a1b1 U2 = a2b2

1. A society consists of two consumers who obtain utility from consuming pods a and b. Their initial endowments are (8,5) and (1, 1), respectively. "heir utility functions are U1 = arbı and U2 = azb2. a) Find the Walrasian equilibrium. b) Now assume you are a benevolent dictator and want to maximise V = min(U1, U2). Find the optimal allocation of goods.

1. A society consists of two consumers who obtain utility from consuming pods a and b. Their initial endowments are (8,5) and (1, 1), respectively. "heir utility functions are U1 = arbı and U2 = azb2. a) Find the Walrasian equilibrium. b) Now assume you are a benevolent dictator and want to maximise V = min(U1, U2). Find the optimal allocation of goods.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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