Consider a market with M= 2 consumers and L = 2 goods. The preferences of each consumer are u₁(x₁) = min (x₁, x2} (6) U₂(x2) = X1X2 (7) Draw the Edgeworth box for this economy, where endowments are ₁ = (0,1) and ₂ = (1,0). Be sure to label the budget constraint, endowment point, equilibrium price ratio, equilibrium allocation, and the indifference curves of each consumer.
Consider a market with M= 2 consumers and L = 2 goods. The preferences of each consumer are u₁(x₁) = min (x₁, x2} (6) U₂(x2) = X1X2 (7) Draw the Edgeworth box for this economy, where endowments are ₁ = (0,1) and ₂ = (1,0). Be sure to label the budget constraint, endowment point, equilibrium price ratio, equilibrium allocation, and the indifference curves of each consumer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider a market with M= 2 consumers and L = 2 goods. The preferences of each
consumer are
u₁(x₁) = min (x₁, x2}
(6)
U₂(x2) = X1X2
(7)
Draw the Edgeworth box for this economy, where endowments are ₁ = (0,1) and ₂ = (1,0). Be sure to label the budget constraint, endowment point, equilibrium price ratio, equilibrium allocation, and the indifference curves of each consumer.
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