D2) Consider an exchange economy with two agents, A and B, and two goods, 1 and 2. AgentA will only consume the goods in fixed proportions and has utility function U4 (x†, x²)min (2xf, x). Agent B, on the other hand, has a utility function given by UB (xf , x54x3 + 3x3. Assume that the total amount of good 1 available is ēj = 6 and the totalamount of good 2 available is ēz = 10. Suppose Agent A starts with an endowment of(et, es) = (5, 2). What would the final equilibrium allocation be?

Total supply of a good is equals the endowments of two goods. We have 2 Goods with two person.

Consider an exchange economy with two agents, A and B, and two goods, 1 and 2. Agent A will only consume the goods in fixed proportions and has utility function U4 (x†, x²) min (2xf, x). Agent B, on the other hand, has a utility function given by UB (xf , x5 4.x + 3x5. Assume that the total amount of good 1 available is ēj = 6 and the total amount of good 2 available is ēz = 10. Suppose Agent A starts with an endowment of (et, es) = (5,2). What would the final equilibrium allocation be?

Consider an exchange economy with two agents, A and B, and two goods, 1 and 2. Agent A will only consume the goods in fixed proportions and has utility function U4 (x†, x²) min (2xf, x). Agent B, on the other hand, has a utility function given by UB (xf , x5 4.x + 3x5. Assume that the total amount of good 1 available is ēj = 6 and the total amount of good 2 available is ēz = 10. Suppose Agent A starts with an endowment of (et, es) = (5,2). What would the final equilibrium allocation be?

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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