Question 4: Finding Contract Curve and Competitive equilibrium Price In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Suppose that Trinity's utility function is UT = GT HT, and Miyoung's utility function is UM = GM (HM)². Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. a. b. Determine P, the competitive price of G, where the price of H is normalized to equal one.

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Question 4: Finding Contract Curve and Competitive equilibrium Price
In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility
functions. Suppose that Trinity's utility function is UT = GT HT, and Miyoung's utility function is UM
GM (HM)². Between them, they own 100 units of G and 50 units of H.
Solve for their contract curve.
a.
b. Determine P, the competitive price of G, where the price of H is normalized to equal one.
=
Transcribed Image Text:Question 4: Finding Contract Curve and Competitive equilibrium Price In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Suppose that Trinity's utility function is UT = GT HT, and Miyoung's utility function is UM GM (HM)². Between them, they own 100 units of G and 50 units of H. Solve for their contract curve. a. b. Determine P, the competitive price of G, where the price of H is normalized to equal one. =
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