10 1. Suppose there are two consumers, A and B.The utility functions of each consumer are given by:UA(X,Y)=X*YUB(X,Y)=X*Y³Therefore:For consumer A: MUX-Y; MUY-XFor consumer B: MUX-Y³; MUY-3XY²The initial endowments are:A: X= 10; Y = 6B: X-14; Y = 19a)Suppose the price of Y, Py = 1. Calculate the price of X, Px that will lead to acompetitive equilibrium.b)How much of each good does each consumer demand in equilibrium?Consumer A's Demand for X:Consumer A's Demand for YConsumer B's demand for XConsumer B's demand for YWhat is the marginal rate of substitution for consumer A at the competitivec)equilibrium?

The rate at which a consumer is ready to give up certain units of a good to consume another good is…

1. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y)=X*Y UB(X,Y)=X*Y³ Therefore: For consumer A: MUX-Y; MUY-X For consumer B: MUX-Y³; MUY = 3XY² The initial endowments are: A: X= 10; Y = 6 B: X= 14; Y = 19 Suppose the price of Y, PY=1. Calculate the price of X, Px that will lead competitive equilibrium.

1. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y)=XY UB(X,Y)=XY³ Therefore: For consumer A: MUX-Y; MUY-X For consumer B: MUX-Y³; MUY = 3XY² The initial endowments are: A: X= 10; Y = 6 B: X= 14; Y = 19 Suppose the price of Y, PY=1. Calculate the price of X, Px that will lead competitive equilibrium.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.9P

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