(a)Set up the plannerís problem.(b)Calculate the first-best outcome (i.e., the social plannerís solution) Consider an economy with 2 goods and 2 agents. The first agent has the utilityfunction, u (x1, x2) = ln x₁ + 2 ln x2, and the other one has u (y₁, y2) = 2 ln y₁ + ln y2.The aggregate endowments of the 2 goods are given by (50, 100). Suppose there is asocial planner who cares about agents equally.

Consider an economy with 2 goods and 2 agents. The first agent has the utility function, u (x₁, x₂) = ln x₁ + 2 ln x2, and the other one has u (y₁, Y2) = 2 ln y₁ + ln y2. The aggregate endowments of the 2 goods are given by (50, 100). Suppose there is a social planner who cares about agents equally.

Consider an economy with 2 goods and 2 agents. The first agent has the utility function, u (x₁, x₂) = ln x₁ + 2 ln x2, and the other one has u (y₁, Y2) = 2 ln y₁ + ln y2. The aggregate endowments of the 2 goods are given by (50, 100). Suppose there is a social planner who cares about agents equally.

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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