2. Suppose u²(x¹') = x; and w; = 0 for both agents i. (“Ann only likes apples, Bobonly likes bananas, Ann only has bananas, and Bob only has apples.") To makethe model interesting, assume w and w are both strictly positive.(a) For a given w; and wi, which allocations are Pareto optimal?(b) For a given w and w, what are all of the competitive equilibria?

Utility function for both agents : Ui= xi Agent 1 = Ann , Agent 2 = Bob Ann only like apples and…

2. Suppose u¹(x¹) = x and w=0 for both agents i. ("Ann only likes apples, Bob only likes bananas, Ann only has bananas, and Bob only has apples.") To make the model interesting, assume w and wf are both strictly positive. (a) For a given w (b) For a given w and w, which allocations are Pareto optimal? and w, what are all of the competitive equilibria?

2. Suppose u¹(x¹) = x and w=0 for both agents i. ("Ann only likes apples, Bob only likes bananas, Ann only has bananas, and Bob only has apples.") To make the model interesting, assume w and wf are both strictly positive. (a) For a given w (b) For a given w and w, which allocations are Pareto optimal? and w, what are all of the competitive equilibria?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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16.11. Ted and Joe each consume peaches, x, and plums, y. The consumers have identical 10y7x7, MRS = 10yr^TTogether, they have 10 peaches MRSJoe utility functions, with and 10 plums. Verify whether each of the following allocations is on the contract curve: a) Ted: 8 plums and 9 peaches; Joe: 2 plums and 1 peach. b) Ted: 1 plum and 1 peach; Joe: 9 plums and 9 peaches. %3D
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