For Questions 5-7 below, consider the following description of a two-goods example:Assume two consumers with utility functions of the form1/2 1/2UX (x₁, x₂) = x/²x² and UX (y₁, 92) = y1Y2.Further, suppose that consumer X is endowed with wx = (6,2) and consumer Y with w = (2,6).Question 5. Assume the consumers face prices p = (1, 1). Determine the net demands for eachconsumer.Question 6. Assume the situation of an exchange economy.(a) Determine the contract curve as an expression in which good 1 (₁) is a function of good 2(T₂).(b) Provide a diagram that illustrates the contract curve and the core of the economy.(c) Determine the Walrasian equilibrium prices.Question 7. Provide general formulations of the First and Second Welfare Theorems for an ex-change economy and, using the specific exchange economy of this section, illustrate the theoremsin a diagram.

Given information Utility function for consumer X U=X10.5X20.5 Utility function for consumer Y…

Assume two consumers with utility functions of the form UX (x₁, x₂) = x¹/²x¹/² and UY (3₁, 32) = Y1Y2. 1/2 Further, suppose that consumer X is endowed with X = (6, 2) and consumer Y with wY = (2,6). Question 5. Assume the consumers face prices p = (1, 1). Determine the net demands for each consumer.

Assume two consumers with utility functions of the form UX (x₁, x₂) = x¹/²x¹/² and UY (3₁, 32) = Y1Y2. 1/2 Further, suppose that consumer X is endowed with X = (6, 2) and consumer Y with wY = (2,6). Question 5. Assume the consumers face prices p = (1, 1). Determine the net demands for each consumer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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