Consider the pure exchange economy with 2 goods, good 1 and good 2, and two consumers, consumer A and consumer B. The consumers have the following utility functions: UA(X1A,X2A)=x1A+3×2A; UB(×1B,×2B)=x1B +x2B- Consumer A is initially endowed with 4 units of good A and no unit of good 2, that is, consumer A's initial endowment is (w1A,W2A)=(4,0). Consumer B is initially endowed with 3 units of good 2 and no unit of good 1, that is, (W1B,W2B)=(0,3). In order to implement the allocation (x1A,X2A)=(2,3), (x1B.,X2B)=(2,0) as a Walrasian equilibrium, what should the relative price p1/p2 of good 1 be?

Consider the pure exchange economy with 2 goods, good 1 and good 2, and two consumers, consumer A and consumer B. The consumers have the following utility functions: UA(X1A,X2A)=x1A+3×2A; UB(×1B,×2B)=x1B +x2B- Consumer A is initially endowed with 4 units of good A and no unit of good 2, that is, consumer A's initial endowment is (w1A,W2A)=(4,0). Consumer B is initially endowed with 3 units of good 2 and no unit of good 1, that is, (W1B,W2B)=(0,3). In order to implement the allocation (x1A,X2A)=(2,3), (x1B.,X2B)=(2,0) as a Walrasian equilibrium, what should the relative price p1/p2 of good 1 be?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

p₁/p₂=1/3

None of the other answers.

p₁/p₂=3

p₁/p₂=1/2

p₁/p₂=1

Consider the pure exchange economy with 2
goods, good 1 and good 2, and two consumers,
consumer A and consumer B. The consumers
have the following utility functions:
UA(X1A,X2A)=x1A+3×2A; UB(x1B.x2B)=x1B +X2B-
Consumer A is initially endowed with 4 units of
good A and no unit of good 2, that is, consumer
A's initial endowment is (w1A,W2A)=(4,0).
Consumer B is initially endowed with 3 units of
good 2 and no unit of good 1, that is,
(W1B,W2B)=(0,3). In order to implement the
allocation (x1A,X2A)=(2,3), (x1B.X2B)=(2,0) as a
Walrasian equilibrium, what should the relative
price p1/p2 of good 1 be?

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