Consider an economy with a private good and public good. The economy consists of two consumers whose utility functions are:u1(x1,y)=1/2 ln x1 + 1/2 ln y and u2(x2,y)=1/3 ln x2 + 2/3 ln y (better written equations attached)The endowment of consumer 1 is w1=2, and the endowment of consumer 2 is w2=3, both in units of private goods. The production of public good uses the linear Technology y=z.Find Lindahl equilibrium. u₁(x, y) = 1⁄2 ln x ₁ + 1⁄²lny and u₂(x, y) = // ln x₂ + ²/3 ln y/ 122

A utility function is a mathematical depiction of an individual's preferences or pleasure from…

Answered: Consider an economy with a private good…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Consider an economy with a private good and public good. The economy consists of two consumers whose utility functions are:

u₁(x₁,y)=1/2 ln x₁ + 1/2 ln y and u₂(x₂,y)=1/3 ln x₂ + 2/3 ln y (better written equations attached)

The endowment of consumer 1 is w₁=2, and the endowment of consumer 2 is w₂=3, both in units of private goods. The production of public good uses the linear Technology y=z.

Find Lindahl equilibrium.

u₁(x, y) = 1⁄2 ln x ₁ + 1⁄²lny and u₂(x, y) = // ln x₂ + ²/3 ln y
/ 1
2
2

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