Consider an exchange economy with two goods, 200 agents of type A, and 100 agents of type B. The preferences of agents of type A can be represented by the utility function u4(x1,x2) = VT1, those of type B by u (x1, x2) = 2x2. Initial endowments are given by wA = (10, 20) and wB = (20, 10). Mark the correct answers: (Hint: A sketch of the Edgeworth box may be helpful.) Select one or more: a. The equilibrium allocation is Pareto efficient. b. In the Walrasian equilibrium, each consumer of type A consumes 10 units of good 1. C. The initial endowment allocation is an equilibrium allocation. d. There is no Walrasian equilibrium. e. p* = (2, 1) is a Walrasian equiliprium price. f. In the Walrasian equilibrium, each consumer of type A consumes 20 units of good 1.

Consider an exchange economy with two goods, 200 agents of type A, and 100 agents of type B. The preferences of agents of type A can be represented by the utility function u4(x1,x2) = VT1, those of type B by u (x1, x2) = 2x2. Initial endowments are given by wA = (10, 20) and wB = (20, 10). Mark the correct answers: (Hint: A sketch of the Edgeworth box may be helpful.) Select one or more: a. The equilibrium allocation is Pareto efficient. b. In the Walrasian equilibrium, each consumer of type A consumes 10 units of good 1. C. The initial endowment allocation is an equilibrium allocation. d. There is no Walrasian equilibrium. e. p* = (2, 1) is a Walrasian equiliprium price. f. In the Walrasian equilibrium, each consumer of type A consumes 20 units of good 1.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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