Question 1. The utility functions of each consumer are given by: UA(X,Y)= X¹/2*y1/2 UB(X,Y)=X+Y Suppose there are two consumers, A and B. The initial endowments are:
Question 1. The utility functions of each consumer are given by: UA(X,Y)= X¹/2*y1/2 UB(X,Y)=X+Y Suppose there are two consumers, A and B. The initial endowments are:
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 9P
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![Question 1.
The utility functions of each consumer are given by:
UA(X,Y)= X¹/2*y1/2
UB(X,Y)=X+Y
The initial endowments are:
A: X = 8; Y = 3
B: X = 4; Y = 5
Suppose there are two consumers, A and B.
a) Using an Edgeworth Box, graph the initial allocation (label it "W") and draw the indifference curve for
each consumer that runs through the initial allocation. Be sure to label your graph carefully and
accurately.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0bfeb90e-22e6-4ede-a4eb-428bfbf3c4aa%2Fa50ba321-e715-4ed8-ba87-9318a3053b20%2Fxmjl57u_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 1.
The utility functions of each consumer are given by:
UA(X,Y)= X¹/2*y1/2
UB(X,Y)=X+Y
The initial endowments are:
A: X = 8; Y = 3
B: X = 4; Y = 5
Suppose there are two consumers, A and B.
a) Using an Edgeworth Box, graph the initial allocation (label it "W") and draw the indifference curve for
each consumer that runs through the initial allocation. Be sure to label your graph carefully and
accurately.
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