consider the following description of a two-goods example: Assume two consumers with utility functions of the form „1/2 1/2 U* (*1, 2) = r and U (. 2) = 2- Further, suppose that consumer X is endowed with w = (6, 2) and consumer Y with wY (2,6).

consider the following description of a two-goods example: Assume two consumers with utility functions of the form „1/2 1/2 U* (*1, 2) = r and U (. 2) = 2- Further, suppose that consumer X is endowed with w = (6, 2) and consumer Y with wY (2,6).

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assume the consumers face prices p = (1, 1). Determine the net demands for each consumer.

,consider the following description of a two-goods example:
Assume two consumers with utility functions of the form
U* (*1, #2) = 2r2
and UY (V. 2)
Further, suppose that consumer X is endowed with w = (6, 2) and consumer Y with wY
= (2,6).

Expert Solution

Step 1

Given,

Consumer X= (6,2)

Consumer Y= (2,6)

prices P = (1, 1)

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