2 4 In a pure exchange economy with two goods, G and H, the two traders have Cobb Douglas utility functions Amos utility is Ua (Ga)(H)1 and Elises is Ue (Ge)(He)1 What are their marginal rates of substitution Between them, Amos and Elise own 100 units of G and 50 units of H Thus, if Amos has Ga and...

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2.4 In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas...

Question:

2.4 In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Amos’ utility is Ua = (Ga)α(Hα)1 - α

and Elise’s is Ue = (Ge)β(He)1 - β. What are their marginal rates of substitution? Between them, Amos and Elise own 100 units of G and 50 units of H. Thus, if Amos has Ga and Ha, Elise has Ge = 100 - Ga and He = 50 - Ha. Solve for their contract curve.

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