QUESTION 4Linguini and Colette consume only éclair (x,) and profiterole (x2). Linguini has utility functionUA = x4x4 and Colette has utility function UB = 2xfx. Linguini is endowed with 10 éclair (x,)and 3 profiterole (x), while Colette is endowed with 20 éclair (x,) and 9 profiterole (x2).(a) Draw an Edgeworth box with x, on the horizontal axis and x, on the vertical axis. PositionLinguini on the bottom left corner and Colette on the top right comer. Indicate the total numberof units of x, and x2. Label the endowment allocation.(b) Derive the equation of the contract curve, ie., find x(x). In your graph in (a), draw thecontract curve.

A want satisfying power of a commodity or service is known as its utility. Utility is a significant…

QUESTION 4 Linguini and Colette consume only éclair (x₁) and profiterole (x₂). Linguini has utility function U^ = x^x and Colette has utility function U = 2xx. Linguini is endowed with 10 éclair (x₂) and 3 profiterole (x₂), while Colette is endowed with 20 éclair (x₁) and 9 profiterole (x₂). (a) Draw an Edgeworth box with x₁ on the horizontal axis and x₂ on the vertical axis. Position Linguini on the bottom left corner and Colette on the top right corner. Indicate the total number of units of X₁ and x₂. Label the endowment allocation. (b) Derive the equation of the contract curve, i.e., find x(x). In your graph in (a), draw the contract curve.

QUESTION 4 Linguini and Colette consume only éclair (x₁) and profiterole (x₂). Linguini has utility function U^ = x^x and Colette has utility function U = 2xx. Linguini is endowed with 10 éclair (x₂) and 3 profiterole (x₂), while Colette is endowed with 20 éclair (x₁) and 9 profiterole (x₂). (a) Draw an Edgeworth box with x₁ on the horizontal axis and x₂ on the vertical axis. Position Linguini on the bottom left corner and Colette on the top right corner. Indicate the total number of units of X₁ and x₂. Label the endowment allocation. (b) Derive the equation of the contract curve, i.e., find x(x). In your graph in (a), draw the contract curve.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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