6. (b) Consider an exchange economy with two agents Á and B, and two goods i and y. Consumption of the two goods is given by: „(1-a) U^(Xa»Ya) = xfyt-a) U°(Xp,Y») = x$y{t-b) Where xA is agent A's consumption of good x etc. Let the agents' initial endowments be: Good Agent A 1 B 1 (%)- i) Find competitive equilibrium price ratio |for this economy. ii) Why is it sufficient to compute the market clearing price ratio for just one ma (say) to answer (i).

6. (b) Consider an exchange economy with two agents Á and B, and two goods i and y. Consumption of the two goods is given by: „(1-a) U^(Xa»Ya) = xfyt-a) U°(Xp,Y») = x$y{t-b) Where xA is agent A's consumption of good x etc. Let the agents' initial endowments be: Good Agent A 1 B 1 (%)- i) Find competitive equilibrium price ratio |for this economy. ii) Why is it sufficient to compute the market clearing price ratio for just one ma (say) to answer (i).

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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