Consider an economy with 2 goods and 2 identical agents, each of whom has the following utility function, u (x1; x2) = ln x1 + 2 ln x2. The aggregate endowments of the 2 goods are given by (1; 2). Suppose there is a social planner who cares about agents equally.(a) Set up the plannerís problem. Calculate the first-best outcome

Consider an economy with 2 goods and 2 identical agents, each of whom has the following utility function, u (x1; x2) = ln x1 + 2 ln x2. The aggregate endowments of the 2 goods are given by (1; 2). Suppose there is a social planner who cares about agents equally.(a) Set up the plannerís problem. Calculate the first-best outcome

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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