worth commodities Xa and d Ya are A's endowments, Xb and Yb are B's, and Xo = Xa + Xb, Yo = Ya + Yb), the competitive equilibrium allocation of the two commodities represents a mutual tangency of both consumers' indifference curv with each other and with a common budget line. (b) Suppose MRSa = Ya/Xa, MRSb = Yb/Xb, Xa = 10, Ya, = 100, Xb= 50, Yb = 20 and let good Y be the numeraire (Py = 1). Verify that the competitive equilibrium price is Px = 2.

worth commodities Xa and d Ya are A's endowments, Xb and Yb are B's, and Xo = Xa + Xb, Yo = Ya + Yb), the competitive equilibrium allocation of the two commodities represents a mutual tangency of both consumers' indifference curv with each other and with a common budget line. (b) Suppose MRSa = Ya/Xa, MRSb = Yb/Xb, Xa = 10, Ya, = 100, Xb= 50, Yb = 20 and let good Y be the numeraire (Py = 1). Verify that the competitive equilibrium price is Px = 2.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 8PA

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