2(b)There are three people and two goods in an economy. The utility functions and the initial bundles aregiven below:U₁ = X11 X 12Uz = 2X zi+ X 22W₁ = (0,8)W=(2,2)W3= (8,0)U3 = x 31 x 32+X 32Suppose it is suggested that the three traders move to the allocation x given by x₁= (1,2), x₂= (8,4),X3= (1,4)b. Show that x makes no one worse off than the original allocation.c. Show that x is not in the core.

Utility function can be defined as the measure for a group of goods and services preferred by…

2(b)There are three people and two goods in an economy. The utility functions and the given below: U₁ = X11 X 12 W₁ = (0,8) W>=(2,2) U, = 2X zi+ X zz U₂ = X 32 X 32+X 32 W;= (8,0) Suppose it is suggested that the three traders move to the allocation x given by x₁= (1,2), x₂= (8,4), X₁= (1,4) b. Show that x makes no one worse off than the original allocation. c. Show that x is not in the core.

2(b)There are three people and two goods in an economy. The utility functions and the given below: U₁ = X11 X 12 W₁ = (0,8) W>=(2,2) U, = 2X zi+ X zz U₂ = X 32 X 32+X 32 W;= (8,0) Suppose it is suggested that the three traders move to the allocation x given by x₁= (1,2), x₂= (8,4), X₁= (1,4) b. Show that x makes no one worse off than the original allocation. c. Show that x is not in the core.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.10P

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