Question 2. An economy has two goods denoted by X and Y, and two agents, Agent 1 and Agent 2. For both agents, their indirect utility functions identical: For i = 1,2, (pi+p²) 1 vi (Px, Py, m) where pa, py denote prices the two goods, m the income and r is a fixed parameter. = m

Question 2. An economy has two goods denoted by X and Y, and two agents, Agent 1 and Agent 2. For both agents, their indirect utility functions identical: For i = 1,2, (pi+p²) 1 vi (Px, Py, m) where pa, py denote prices the two goods, m the income and r is a fixed parameter. = m

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Problem 1QTC

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Question

2. Now, assume that agents have endowments of the two goods which determines their income.
Let w₁ = (2, 1) and w2=(1,3) be the respective endowments. Calculate the market clearing price
ratio px/py.
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