Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences aredescribed by the Cobb-Douglas Utility function:U, = B!³ C?31/3S.Andrew's preferences are given by:UA = B}{²C}2´AAssume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA = 10, Bs = 20, CA = 20 and Cs= 10. Whatis the equilibrium price of computers relative to bikes (p)?%3D%D

Andrew and Sarah are two traders in pure exchange economy with two goods:- Bike (B) and computer…

Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences are described by the Cobb-Douglas Utility function: U, = B³C? Andrew's preferences are given by: UA = BX²C}2 1/2 Assume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA = 10, Bs= 20, CA = 20 and Cs= 10. What is the equilibrium price of computers relative to bikes (p)?

Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences are described by the Cobb-Douglas Utility function: U, = B³C? Andrew's preferences are given by: UA = BX²C}2 1/2 Assume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA = 10, Bs= 20, CA = 20 and Cs= 10. What is the equilibrium price of computers relative to bikes (p)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences are
described by the Cobb-Douglas Utility function:
U, = B!³ C?3
1/3
S.
Andrew's preferences are given by:
UA = B}{²C}2
´A
Assume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA = 10, Bs = 20, CA = 20 and Cs= 10. What
is the equilibrium price of computers relative to bikes (p)?
%3D
%D

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