2. Suppose u¹(x¹) = x and w=0 for both agents i. ("Ann only likes apples, Bob only likes bananas, Ann only has bananas, and Bob only has apples.") To make the model interesting, assume w and wf are both strictly positive. (a) For a given w (b) For a given w and w, which allocations are Pareto optimal? and w, what are all of the competitive equilibria?
2. Suppose u¹(x¹) = x and w=0 for both agents i. ("Ann only likes apples, Bob only likes bananas, Ann only has bananas, and Bob only has apples.") To make the model interesting, assume w and wf are both strictly positive. (a) For a given w (b) For a given w and w, which allocations are Pareto optimal? and w, what are all of the competitive equilibria?
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.1P
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![2. Suppose u²(x¹') = x; and w; = 0 for both agents i. (“Ann only likes apples, Bob
only likes bananas, Ann only has bananas, and Bob only has apples.") To make
the model interesting, assume w and w are both strictly positive.
(a) For a given w; and wi, which allocations are Pareto optimal?
(b) For a given w and w, what are all of the competitive equilibria?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd86cda1-af2d-4585-b012-7ab18b7ef9b3%2F30980b85-3d1e-40de-a862-930daea486db%2Frhuauv9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Suppose u²(x¹') = x; and w; = 0 for both agents i. (“Ann only likes apples, Bob
only likes bananas, Ann only has bananas, and Bob only has apples.") To make
the model interesting, assume w and w are both strictly positive.
(a) For a given w; and wi, which allocations are Pareto optimal?
(b) For a given w and w, what are all of the competitive equilibria?
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