ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question

Find the marginal rate of substitution for Household A.

Consider a pure exchange economy with two goods k = 1,2 and two households i = A, B. Consider the endowments ea = (10, 2) and eg = (2, 10) for households A and B, respectively. Assume the utility functions as the following: UA(TA1, TA2) = 3XA1 + 5¤A2 uB(xB1,XB2) = xB1* B2 • 1/3 2/3 and
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Transcribed Image Text:Consider a pure exchange economy with two goods k = 1,2 and two households i = A, B. Consider the endowments ea = (10, 2) and eg = (2, 10) for households A and B, respectively. Assume the utility functions as the following: UA(TA1, TA2) = 3XA1 + 5¤A2 uB(xB1,XB2) = xB1* B2 • 1/3 2/3 and
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