6. Sarah and Clare have identical utility functions U = 5 In(x)+y: Sarah starts out with 16 units of x and 5 units of y and Claire starts out with 4 units of x and 15 units of y. a. Draw the Edgeworth box, label the endowment point and sketch some "normal" indifference curves through the endowment point. Shade the region where trades are possible. b. Find Sarah and Claire's Marshallian demands as a function of the price of x, price of y and their endowments. Find the market clearing price and how much x and y the two consumer after trading. d. Who is happier after trading? c.

6. Sarah and Clare have identical utility functions U = 5 In(x)+y: Sarah starts out with 16 units of x and 5 units of y and Claire starts out with 4 units of x and 15 units of y. a. Draw the Edgeworth box, label the endowment point and sketch some "normal" indifference curves through the endowment point. Shade the region where trades are possible. b. Find Sarah and Claire's Marshallian demands as a function of the price of x, price of y and their endowments. Find the market clearing price and how much x and y the two consumer after trading. d. Who is happier after trading? c.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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