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26. In an exchange economy there are two people (A and B), and two goods (x₁ and 2₂). Their respective utility functions and endowments are: UA (x₁, x²) = x₁ + 2x^, U³ (x³, x²) = 2x³ + x², w₁ = = (1,1), (1,1). What are the minimum and maximum possible amounts of r on the contract curve? WB = 27. (continues using scenario from previous question) What are the minimum and maximum possible amounts of x in the core? 28. (continues using scenario from previous question) Are the core and the contract curve identical in this particular example?

26. In an exchange economy there are two people (A and B), and two goods (x₁ and 2₂). Their respective utility functions and endowments are: UA (x₁, x²) = x₁ + 2x^, U³ (x³, x²) = 2x³ + x², w₁ = = (1,1), (1,1). What are the minimum and maximum possible amounts of r on the contract curve? WB = 27. (continues using scenario from previous question) What are the minimum and maximum possible amounts of x in the core? 28. (continues using scenario from previous question) Are the core and the contract curve identical in this particular example?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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26. In an exchange economy there are two people (A and B), and two goods (₁ and 2). Their respective utility functions and endowments are: Uª (x₁,x) = x + 2x2, U³ (x³, x) = 2x³ + x², w₁ = (1, 1), WB = (1, 1). What are the minimum and maximum possible amounts of rf on the contract curve? 27. (continues using scenario from previous question) What are the minimum and maximum possible amounts of x in the core? 28. (continues using scenario from previous question) Are the core and the contract curve identical in this particular example? 29. (continues using scenario from previous question) Suppose that in equilibrium, the utility of consumer A is 3.5 (UA = 3.5). Set p2 = 1. Find the equilibrium price p₁, the equilibrium quantities and the utility of consumer B.
Transcribed Image Text:26. In an exchange economy there are two people (A and B), and two goods (₁ and 2). Their respective utility functions and endowments are: Uª (x₁,x) = x + 2x2, U³ (x³, x) = 2x³ + x², w₁ = (1, 1), WB = (1, 1). What are the minimum and maximum possible amounts of rf on the contract curve? 27. (continues using scenario from previous question) What are the minimum and maximum possible amounts of x in the core? 28. (continues using scenario from previous question) Are the core and the contract curve identical in this particular example? 29. (continues using scenario from previous question) Suppose that in equilibrium, the utility of consumer A is 3.5 (UA = 3.5). Set p2 = 1. Find the equilibrium price p₁, the equilibrium quantities and the utility of consumer B.
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