2(b)There are three people and two goods in an economy. The utility functions and the initial bundles aregiven below:U1 = X11X 12U = 2x 21+ X 22U3 = X 31 X 3z+X 32W; = (0,8)W;= (2,2)Wy= (8,0)Suppose it is suggested that the three traders move to the allocation x given by x;= (1,2), x2= (8,4),X3= (1,4)b. Show that x makes no one worse off than the original allocation.

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There are three people and two goods in an economy. The utility functions and the initial bundles are given below: W. = (0.8)

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2(b)There are three people and two goods in an economy. The utility functions and the initial bundles are
given below:
U1 = X11X 12
U = 2x 21+ X 22
U3 = X 31 X 3z+X 32
W; = (0,8)
W;= (2,2)
Wy= (8,0)
Suppose it is suggested that the three traders move to the allocation x given by x;= (1,2), x2= (8,4),
X3= (1,4)
b. Show that x makes no one worse off than the original allocation.

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