Consider a pure exchange economy, where both consumers have exactly the same preferences, described by a Cobb-Douglas utility function, but have different endowments. In such an economy, an equitable distribution of goods (where each individual consumes exactly half of each good) is a Walrasian equilibrium allocatior v[ Select ] always, for any initial endowment.

Consider a pure exchange economy, where both consumers have exactly the same preferences, described by a Cobb-Douglas utility function, but have different endowments. In such an economy, an equitable distribution of goods (where each individual consumes exactly half of each good) is a Walrasian equilibrium allocatior v[ Select ] always, for any initial endowment.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.5P

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