● Say that v(p, y) = y ¹ - 2p₁² - 5p2. Compute the demand function 2.2P1-24. Consider a 2x2 pure exchange economy with agents 1 and 2, goods x and y, and initial endowmentse¹ = (8,6) and e² = (12, 4).• Draw the Edgeworth box, identify the initial endowment and define analytically and graphically(as precisely as possible) agents' budget sets if the price vector is p = (2,4).Let agents' utility function be given by U(x, y) = x + 2y. Is the initial endowment a ParetoEfficient allocation? Is the initial endowment a competitive equilibrium? Explain your answers.. Provide the general definition of competitive equilibrium for a 2x2 pure exchange economy.●

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-2 Say that v(p, y) = y¹ - 2p₁² - 5p2. Compute the demand function 2₁.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

● Say that v(p, y) = y ¹ - 2p₁² - 5p2. Compute the demand function 2.
2P1
-2
4. Consider a 2x2 pure exchange economy with agents 1 and 2, goods x and y, and initial endowments
e¹ = (8,6) and e² = (12, 4).
• Draw the Edgeworth box, identify the initial endowment and define analytically and graphically
(as precisely as possible) agents' budget sets if the price vector is p = (2,4).
Let agents' utility function be given by U(x, y) = x + 2y. Is the initial endowment a Pareto
Efficient allocation? Is the initial endowment a competitive equilibrium? Explain your answers.
. Provide the general definition of competitive equilibrium for a 2x2 pure exchange economy.
●

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