4)Consider a pure exchange economy with two goods, (x, y), and two consumers, (1, 2).Consumers' endowments aree1 = (4, 2) and e? = (6, 6)And their preferences are represented by utility functions:u(x, y) = x³y and u(x,y) = x³y$(d) Set up the utility maximization problem for each consumer and solve for theirMarshallian demand functions.(e) Compute the market demand for each good.() State the Walrus law for this economy and explain its economic interpretation.(g) Assume the excess demand for good x is zero, i.e., EDx = 0, and calculate theratio of prices, i.e., p Ipy . Then, use this ratio of prices to show that theexcess demand for goodYis also zero, i.e., EDy= 0. Briefly explain how this relates to the Walrus' law.(h) Given the price ratio found above, calculate the equilibrium allocations and showthat feasibility, individual rationality, and Pareto efficiency holds.

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4) Consider a pure exchange economy with two goods, (x, y), and two consumers, (1, 2). Consumers' endowments are e1 = (4, 2) and e? = (6, 6) And their preferences are represented by utility functions: u Cr.v) = x³y and a (x,y) = x³y} (d) Set up the utility maximization problem for each consumer and solve for their Marshallian demand functions. (e) Compute the market demand for each good. (f) State the Walrus law for this economy and explain its economic interpretation.

4) Consider a pure exchange economy with two goods, (x, y), and two consumers, (1, 2). Consumers' endowments are e1 = (4, 2) and e? = (6, 6) And their preferences are represented by utility functions: u Cr.v) = x³y and a (x,y) = x³y} (d) Set up the utility maximization problem for each consumer and solve for their Marshallian demand functions. (e) Compute the market demand for each good. (f) State the Walrus law for this economy and explain its economic interpretation.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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