2. There are two consumers A and B and two commodities x and y. UA = x%yA-a: Utility function of consumer A. w: consumer A's endowment of good x w: consumer A's endowment of good y „a„1-a. UB = 2xB + YB: Utility function of consumer B. w: consumer B’s endowment of good x w: consumer B's endowment of good y Px: price of good x Py: price of good y ‚y. p = Px /p,: relative price of good x a. Find the equation of the contract curve. b. Find the competitive equilibrium (p*, xả, yÃ, xâ, yB). Your answers should be in terms of Py the parameters.

2. There are two consumers A and B and two commodities x and y. UA = x%yA-a: Utility function of consumer A. w: consumer A's endowment of good x w: consumer A's endowment of good y „a„1-a. UB = 2xB + YB: Utility function of consumer B. w: consumer B’s endowment of good x w: consumer B's endowment of good y Px: price of good x Py: price of good y ‚y. p = Px /p,: relative price of good x a. Find the equation of the contract curve. b. Find the competitive equilibrium (p*, xả, yÃ, xâ, yB). Your answers should be in terms of Py the parameters.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. General Equilibrium Consider a market with two goods, x and z, and two consumers, A and B. The utility functions for consumers A and B are as follows UA ÜB 2 1 == XBZB and the initial endowments for each consumer are @ eA = (4,2) еB = (2,6) where consumer B is endowed with 2 unit of good x and 6 units of good z, respectively. a) Draw the Edgeworth Box (Don't worry about the shape of the utility curves. Just pick a general shape that we have used before). b) Derive the contract curve.
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Ty-ped and correct answer please. I