Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Suppose Tom and Jerry can buy/ sell apples at
Tom's utility Ut (At,Bt)= log At + logBt
s.t. Pa(At) + Pb (Bt) = 12 Pa + 6 Pb
Jerry utility Uj (Aj,Bj)= log Aj + logBj
s.t. Pa(Aj) + Pb (Bj) = 9 Pa + 15 Pb
How many apples and bananas should Tom and Jerry consume?
Answer in terms of Pa and Pb
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