Please solve very soon completely Consider an Edgeworth box economy in which the consumers have the Cobb-Douglas utility functions u,(x,1, X21) = x1x * and u2(x12, X22) = x{2x2. Consumer i'sendowments are (,;, 1)2;) » (), for i = 1, 2. Solve for the equilibrium price ratio and allocation.How do these change with a differential change in w11?

Consider an Edgeworth box economy in which the consumers have the Cobb- Douglas utility functions u₁(X11, X21) = x₁₁x11* and u₂(X12, X22) = x 12x12". Consumer i's endowments are (0) 1 (2;) > 0, for i = 1, 2. Solve for the equilibrium price ratio and allocation. How do these change with a differential change in 11?

Consider an Edgeworth box economy in which the consumers have the Cobb- Douglas utility functions u₁(X11, X21) = x₁₁x11* and u₂(X12, X22) = x 12x12". Consumer i's endowments are (0) 1 (2;) > 0, for i = 1, 2. Solve for the equilibrium price ratio and allocation. How do these change with a differential change in 11?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Please solve very soon completely

Consider an Edgeworth box economy in which the consumers have the Cobb-
Douglas utility functions u,(x,1, X21) = x1x * and u2(x12, X22) = x{2x2. Consumer i's
endowments are (,;, 1)2;) » (), for i = 1, 2. Solve for the equilibrium price ratio and allocation.
How do these change with a differential change in w11?

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Step 1: State the given information

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Step 2: Set up the budget constraint and find demand functions for consumer 1

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Step 3: Set up the budget constraint and find demand functions for consumer 2

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Step 4: Solve for equilibrium price ratio

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Step 5: Find equilibrium allocation

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Step 6: Analyze the effect of a change in w11

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