In an exchange economy, two agents have utility functions u^(x. y) = x y and u (x, y) = x - y, respectively, from x units of Good 1 and y units of Good 2. Assume the initial endowments are o = (@A1,02) and op = (32, 40), respectively. Suppose that an equilibrium is found in which the prices of the good are equal (that is, P1 = P2, i.e., the relative price is 1). If wA.1 = 60, then @A2 = %3D
In an exchange economy, two agents have utility functions u^(x. y) = x y and u (x, y) = x - y, respectively, from x units of Good 1 and y units of Good 2. Assume the initial endowments are o = (@A1,02) and op = (32, 40), respectively. Suppose that an equilibrium is found in which the prices of the good are equal (that is, P1 = P2, i.e., the relative price is 1). If wA.1 = 60, then @A2 = %3D
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.5P
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Transcribed Image Text:In an exchange economy, two agents have utility functions u^(x, y) = x2 y and
u"(x, y) = x · y, respectively, from x units of Good 1 and y units of Good 2.
Assume the initial endowments are w A = (@A.1,2) and oB = (32,40), respectively.
Suppose that an equilibrium is found in which the prices of the good are equal (that is,
Pi = P2, i.e., the relative price is 1).
If WA.1
= 60, then wA.2
%3D
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