PytEin
Badges: 0
Rep:
?
#1
Report Thread starter 6 years ago
#1
So I have this assignment I'm having a hard time with. Any help would be appreciated.

An economy with consumer A and B and two goods x1 and x2. Their preferences are given by the utility functions:

UA(x1,x2) = x1 + 2x2
UB(x1,x2) = min {x1, 2x2}

Their initial endowment are given by:
wA = (12,0)
wB =(0,12)

1. Draw an Edgeworth box and illustrate: initial endowment, one indifference curve for each consumer and the contract curve.

2. What will the relative price ratio necessarily be in equilibrium in this economy?

3. Give the two consumers budget conditions.

In equilibrium consumer B will consume in one of his 'cracks' on the indifference curve.
4. In which ratio will consumer B consume x1 and x2?

In equilibrium, it will for both markets apply supply = demand. Let xiA and xiB represent consumer A's, respectively consumer B's consumption of good i. Here it must apply that xiA + xiB = 12, i = 1,2
5. Combine this with the answer in (4) and use A's budget constraint to find the equilibrium.
0
reply
TSR Learn Together
Badges: 9
Rep:
?
#2
Report 6 years ago
#2
Hi there,

While you're waiting for an answer, did you know we have 300,000 study resources that could answer your question in TSR's Learn together section?

We have everything from Teacher Marked Essays to Mindmaps and Quizzes to help you with your work. Take a look around.

If you're stuck on how to get started, try creating some resources. It's free to do and can help breakdown tough topics into manageable chunks. Get creating now.

Thanks!

Not sure what all of this is about? Head here to find out more.
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

What factors affect your mental health the most right now?

Anxiousness about lockdown easing (99)
5.09%
Uncertainty around my education (291)
14.97%
Uncertainty around my future career prospects (205)
10.55%
Lack of purpose or motivation (272)
13.99%
Lack of support system (eg. teachers, counsellors, delays in care) (85)
4.37%
Impact of lockdown on physical health (111)
5.71%
Loneliness (169)
8.69%
Financial worries (69)
3.55%
Concern about myself or my loves ones getting/having been ill (86)
4.42%
Exposure to negative news/social media (92)
4.73%
Lack of real life entertainment (108)
5.56%
Lack of confidence in making big life decisions (171)
8.8%
Worry about missed opportunities during the pandemic (186)
9.57%

Watched Threads

View All
Latest
My Feed