Consider an economy with 2 goods and 30 agents. There are 10 agents each with the utility function u (x1, x2) = ln x₁ + 2 ln x2 and endowments e = = (3, 1). Also, the other 20 agents each have the utility function u (Z1, Z2) = 2ln z₁ + ln z₂ and endowments e = (1,2). Normalize p2 = 1. Calculate the Walrasian equilibrium price PI =
Consider an economy with 2 goods and 30 agents. There are 10 agents each with the utility function u (x1, x2) = ln x₁ + 2 ln x2 and endowments e = = (3, 1). Also, the other 20 agents each have the utility function u (Z1, Z2) = 2ln z₁ + ln z₂ and endowments e = (1,2). Normalize p2 = 1. Calculate the Walrasian equilibrium price PI =
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.3P
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Transcribed Image Text:Consider an economy with 2 goods and 30 agents. There are 10 agents
each with the utility function u (x1, x2) = ln x₁ + 2 ln x2 and endowments e = = (3, 1).
Also, the other 20 agents each have the utility function u (Z1, Z2) = 2ln z₁ + ln z₂ and
endowments e = (1,2). Normalize p2 = 1. Calculate the Walrasian equilibrium price
PI
=
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