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1. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X, Y) = XY UB(X,Y) = X*Y3
1. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X, Y) = XY UB(X,Y) = X*Y3 Therefore: For consumer A: MUx = Y; MUY = X For consumer B: MUx = Y3; MUy = 3XY2 The initial endowments are: A: X = 12; Y = 10 B: X = 12; Y = 10 a) (40 points) Suppose the price of Y, Py = 1. Calculate the price of X, Px that will lead to a competitive equilibrium
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
