Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y). Individual A is endowed with 5 units of good X and 3 units of good Y, while individual B with 3 and 4 units of goods X and Y, respectively. Assuming utility functions of individuals A and B to be UA=XA YA²2 and UB-XB² Yв where Xi and Yi for i= {A, B} represent individual i's consumption of good X and Y respectively, what will be the set of Pareto optimal allocation in this economy?

Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y). Individual A is endowed with 5 units of good X and 3 units of good Y, while individual B with 3 and 4 units of goods X and Y, respectively. Assuming utility functions of individuals A and B to be UA=XA YA²2 and UB-XB² Yв where Xi and Yi for i= {A, B} represent individual i's consumption of good X and Y respectively, what will be the set of Pareto optimal allocation in this economy?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.6P

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