In an exchange economy, there are two people, A and B, and two goods, x and y. The utility functions of A and B are given by u;=xy; for i=A, B. Person A starts with 72.000 units of x and zero units of y. Person B starts with zero units of x and 8.000 units of y. If the price of good y is 1, what is the competitive equilibrium of good x?

In an exchange economy, there are two people, A and B, and two goods, x and y. The utility functions of A and B are given by u;=xy; for i=A, B. Person A starts with 72.000 units of x and zero units of y. Person B starts with zero units of x and 8.000 units of y. If the price of good y is 1, what is the competitive equilibrium of good x?

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains Rrom Trade

Section: Chapter Questions

Problem 3CQQ

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