A small exchange economy is comprised of two of individuals, A and B, and two types of goods, x,,x. The individuals' preferences over two goods are can be represented by the following utility functions: U*(x;,.x; ) = min (2x,t; ) and U* (x;,x,) = min(x;,. 2x, ). Initial endowments are 10 x, (individual A), and 10 x, (individual B). Calculate the price ratio which yields an equilibrium in the exchange market.
A small exchange economy is comprised of two of individuals, A and B, and two types of goods, x,,x. The individuals' preferences over two goods are can be represented by the following utility functions: U*(x;,.x; ) = min (2x,t; ) and U* (x;,x,) = min(x;,. 2x, ). Initial endowments are 10 x, (individual A), and 10 x, (individual B). Calculate the price ratio which yields an equilibrium in the exchange market.
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.6P
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ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning