Consider the following economy with two goods, x and y, and two consumers, A and B. The tastes of the two consumers are represented by the following utility functions. ua = min(xA, YA) and ug = min(xB, YB). There are 10 units of good x and 10 units of good y that are available in this economy, so that SO XA + XB = 10 and ya + yB = 10. The two consumers cannot consume negative amount of each good, i.e., xA 2 0, xB > 0, ya 2 0, and yß 2 0.
Consider the following economy with two goods, x and y, and two consumers, A and B. The tastes of the two consumers are represented by the following utility functions. ua = min(xA, YA) and ug = min(xB, YB). There are 10 units of good x and 10 units of good y that are available in this economy, so that SO XA + XB = 10 and ya + yB = 10. The two consumers cannot consume negative amount of each good, i.e., xA 2 0, xB > 0, ya 2 0, and yß 2 0.
Chapter1: Making Economics Decisions
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![Consider the following economy with two goods, x and y, and two consumers, A and B. The
tastes of the two consumers are represented by the following utility functions.
Ua = min(xA, YA) and ug = min(xg, YB).
There are 10 units of good x and 10 units of good y that are available in this economy, so that
XA + XB = 10 and ya + yB = 10. The two consumers cannot consume negative amount of each
good, i.e., xA 2 0, xâ > 0, ya 2 0, and yg 2 0.
(a) Draw the Edgeworth box that represents this economy (make sure to include a couple of
indifference curves for each of the two individuals).
(b) Find all Pareto-efficient allocation.
(c) Find competitive equilibria for initial endowment (e, e) = (9, 1).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7be2cbea-5f45-43c9-aed8-f82d6b9f93a8%2F3debeea0-a06c-4c4e-8f65-0c180866605e%2Feo8knua_processed.png&w=3840&q=75)
Transcribed Image Text:Consider the following economy with two goods, x and y, and two consumers, A and B. The
tastes of the two consumers are represented by the following utility functions.
Ua = min(xA, YA) and ug = min(xg, YB).
There are 10 units of good x and 10 units of good y that are available in this economy, so that
XA + XB = 10 and ya + yB = 10. The two consumers cannot consume negative amount of each
good, i.e., xA 2 0, xâ > 0, ya 2 0, and yg 2 0.
(a) Draw the Edgeworth box that represents this economy (make sure to include a couple of
indifference curves for each of the two individuals).
(b) Find all Pareto-efficient allocation.
(c) Find competitive equilibria for initial endowment (e, e) = (9, 1).
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