ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:2.
There are two consumers A and B and two commodities x and y.
,1-a.
UA = x%yAa: Utility function of consumer A.
w: consumer A's endowment of good x
w: consumer A's endowment of good y
UB = 2xB + YR: Utility function of consumer B.
w: consumer B's endowment of good x
w: consumer B's endowment of good y
Px: price of good x
Py: price of good y
p = Px /py; relative price of good x
a. Find the equation of the contract curve.
b. Find the competitive equilibrium (p*, x, yÃ, x;, yB). Your answers should be in terms of
the parameters.
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