Consider a two-person (1 and 2) two good (X and Y) exchange economy. The utility function of person 1 is given by U1 = A1 x1 - b1 x1^2 + y1 and the utility function of person 2 is given by U2 = A2 x2 - b2 x 2^2 + y2 where xi and yi denote respectively person i's the consumption amount of good X and good Y, i = 1, 2. Let A1 = 231, b1 = 1/2, A2 = 231 and b 2 = 1/8 be the values of the parameters above. Suppose the economy has a total of 108 units of good X and 85060 units of good Y What is the value of the marginal rate of substitution of person 1 when each person has the efficient amount of good X ?

Consider a two-person (1 and 2) two good (X and Y) exchange economy. The utility function of person 1 is given by U1 = A1 x1 - b1 x1^2 + y1 and the utility function of person 2 is given by U2 = A2 x2 - b2 x 2^2 + y2 where xi and yi denote respectively person i's the consumption amount of good X and good Y, i = 1, 2. Let A1 = 231, b1 = 1/2, A2 = 231 and b 2 = 1/8 be the values of the parameters above. Suppose the economy has a total of 108 units of good X and 85060 units of good Y What is the value of the marginal rate of substitution of person 1 when each person has the efficient amount of good X ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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