(Solution) An economy with no production technologies has two individuals. There aretwo goods, good x and good y. Individual A owns 60 units of good x and... > Snapessays.com


(Solution) An economy with no production technologies has two individuals. There aretwo goods, good x and good y. Individual A owns 60 units of good x and...


An economy with no production technologies has two individuals. There aretwo goods, good x and good y. Individual A owns 60 units of good x and 90units of good y. Individual B owns 40 units of good X and 10 of good Y . Aíspreferences can be represented by the following utility function:UA(xA; yA) = smallestfxA; yAg:Bís preferences can be represented by the following utility function:UB(xB; yB) = 2xB (yB)2: :a. Draw an Edgeworth box where you can represent the amounts of both goodsthat each individual owns. Also show three indi§erence curves for each of thetwo individuals.b. Find all Pareto e¢ cient allocations both analytically and graphically (youdonít need calculus, just take a good look at the indi§erence curves).c. If prices are px = A + 1 and py = 2, where A is the last digit of your StudentID#, Önd what each individual would want to consume.d. Are prices in (c) General Equiblibrium prices? Explain why.

 


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This question was answered on: Sep 21, 2023

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