Consider an economy with two goods and two states of nature. Thestates are indexed by s = 1,2. Let xns be the quantity of good nThere are two consumers i =that consumer i consumes in state s.(ei1, e1, ei2, e) = (1,2,3, 4) and e²= (4, 3, 2, 1) respectively. Consumers both regard the1,2 with endowments e'(eỉ1, e1, ei2, e2) =two states as equally likely and they have identical von Neumann-Morgensternutility functions12u(ri, 2) = In ai, + In z,3Derive the Arrow-Debreu equilibrium.

In economics, the Arrow–Debreu general equilibrium shows that under certain economic assumptions…

ns Consider an economy with two goods and two states of nature. The states are indexed by s = 1,2. Let T be the quantity of good n that consumer i consumes in state s. There are two consumers i = 1,2 with endowments e¹ 2) = (1,2,3,4) and e² = (e₁,e₁,e2, (eỉ₁, €²1, €12, €²₂) = (4,3,2,1) respectively. Consumers both regard the two states as equally likely and they have identical von Neumann-Morgenstern utility functions 1 2 u(x₁, x2,) = ln ris + 3 In 12, 3 Derive the Arrow-Debreu equilibrium.

ns Consider an economy with two goods and two states of nature. The states are indexed by s = 1,2. Let T be the quantity of good n that consumer i consumes in state s. There are two consumers i = 1,2 with endowments e¹ 2) = (1,2,3,4) and e² = (e₁,e₁,e2, (eỉ₁, €²1, €12, €²₂) = (4,3,2,1) respectively. Consumers both regard the two states as equally likely and they have identical von Neumann-Morgenstern utility functions 1 2 u(x₁, x2,) = ln ris + 3 In 12, 3 Derive the Arrow-Debreu equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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