Consider the following pure exchange economy with different consumer pref- erences and endowments (e.g., @A= (w, w)), and answer the following ques- tion: (a) Draw the Edgeworth box and the endowment point. (b) Find the contract curve yA = f(xA), and plot it on the graph. (c) Find the Pareto optimal allocation and price ratio for the corresponding competitive equilibrium.
Consider the following pure exchange economy with different consumer pref- erences and endowments (e.g., @A= (w, w)), and answer the following ques- tion: (a) Draw the Edgeworth box and the endowment point. (b) Find the contract curve yA = f(xA), and plot it on the graph. (c) Find the Pareto optimal allocation and price ratio for the corresponding competitive equilibrium.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please help with #3
![Consider the following pure exchange economy with different consumer pref-
erences and endowments (e.g., @A = (@,w)), and answer the following ques-
tion:
(a) Draw the Edgeworth box and the endowment point.
(b) Find the contract curve y = f(xA), and plot it on the graph.
(c) Find the Pareto optimal allocation and price ratio for the corresponding
competitive equilibrium.
(d) Is the Pareto optimal allocation a fair allocation? Why?
Question 1
0.5 0.5
UA=x0.5 0.5, UB=x5y5, w = (30,20), B = (10,20).
XB ув
Question 2
0.2 0.8
UA=XA YA, UB XB YB
Question 3
0.4 0.6
= x4y6, w = (60,25), B = (40,25).
2/3
UA=XAYA' =xy, w^= (1,2).
wª = (1,2), w³ = (2,1).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffa0be278-2f71-466e-9833-8ca04e5616ee%2Fa6673507-8b0e-40be-b29c-5cb6308ecd59%2Fw0vrm3k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider the following pure exchange economy with different consumer pref-
erences and endowments (e.g., @A = (@,w)), and answer the following ques-
tion:
(a) Draw the Edgeworth box and the endowment point.
(b) Find the contract curve y = f(xA), and plot it on the graph.
(c) Find the Pareto optimal allocation and price ratio for the corresponding
competitive equilibrium.
(d) Is the Pareto optimal allocation a fair allocation? Why?
Question 1
0.5 0.5
UA=x0.5 0.5, UB=x5y5, w = (30,20), B = (10,20).
XB ув
Question 2
0.2 0.8
UA=XA YA, UB XB YB
Question 3
0.4 0.6
= x4y6, w = (60,25), B = (40,25).
2/3
UA=XAYA' =xy, w^= (1,2).
wª = (1,2), w³ = (2,1).
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