4. Douglas utility functions. Suppose that Tony's utility function is U = GH, and Margaret's utility function is Um= Gm(Hm)³. Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. In a pure exchange economy with two goods, G and H, the two traders have Cobb- Continuing with question 4, determine p, the competitive price of G, where the price of H is normalized to equal one.

4. Douglas utility functions. Suppose that Tony's utility function is U = GH, and Margaret's utility function is Um= Gm(Hm)³. Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. In a pure exchange economy with two goods, G and H, the two traders have Cobb- Continuing with question 4, determine p, the competitive price of G, where the price of H is normalized to equal one.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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True false question. Can it be efficient for one trader to consume all units of the goods while the other trader consumes nothing? In other words, does this point lie on the contract curve?
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