Person 1 with preferences u(x, y) = y1 – 2x1 is endowed with x̂1 = 2 and ŷ1 = 40. Person 2 with preferences u(x, y) = x2– 2y2 is endowed with x̂2 = 20 and ŷ2 = 60. Be prepared to upload an Edgeworth Box Diagram that illustrates the Pareto Preferred Region, the Contract Curve and the Equilibrium. Calculate the Edgeworth Box equilibrium price level.

Person 1 with preferences u(x, y) = y1 – 2x1 is endowed with x̂1 = 2 and ŷ1 = 40. Person 2 with preferences u(x, y) = x2– 2y2 is endowed with x̂2 = 20 and ŷ2 = 60. Be prepared to upload an Edgeworth Box Diagram that illustrates the Pareto Preferred Region, the Contract Curve and the Equilibrium. Calculate the Edgeworth Box equilibrium price level.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.10P

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