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4. There are two consumers, two states and one good in the economy. Consumer 1's Bernoulli utility function is given by u1(xs1)=xs1 and consumer 2's
4. There are two consumers, two states and one good in the economy. Consumer 1's Bernoulli utility function is given by u1(xs1)=xs1 and consumer 2's Bernoulli utility function is given by u2(xs2)=xs2, where xsi is the quantity of consumer i 's contingent commodity for state s(s=1,2). Each consumer believes that state 1 occurs with probability 1/3. Consumer 1's endowment is e1=[e11,e21]=[20,20] and consumer 2's endowment is e2=[e12,e22]=[20,10]. Derive the Arrow-Debreu equilibrium. Who gains by trading in equilibrium and why? 4. There are two consumers, two states and one good in the economy. Consumer 1's Bernoulli utility function is given by u1(xs1)=xs1 and consumer 2's Bernoulli utility function is given by u2(xs2)=xs2, where xsi is the quantity of consumer i 's contingent commodity for state s(s=1,2). Each consumer believes that state 1 occurs with probability 1/3. Consumer 1's endowment is e1=[e11,e21]=[20,20] and consumer 2's endowment is e2=[e12,e22]=[20,10]. Derive the Arrow-Debreu equilibrium. Who gains by trading in equilibrium and why
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