Answered: 2. Derive the equation that completely… | bartleby

Microeconomic Theory

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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Related questions

Question

2. Derive the equation that completely describes efficient allocations of public good Z* in
an economy populated by two agents (1, 2) and two goods (Z,Y) with quasilinear utility
given as U₁ = ln Z₁ + 2 ln Y₁ and U₂ = 2 ln Z₂ + ln Y₂. Production possibility frontier is
Y₁ + Y₂ = 120 – Z. Graph your answer (Hint: MC(Z) = 1).

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