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Adrienne and Stephen consume pizza, Z, and cola, C. Adrienne's utility function is UA = ZC, and Stephen's is US = 70.5005. Their endowments are
Adrienne and Stephen consume pizza, Z, and cola, C. Adrienne's utility function is UA = ZC, and Stephen's is US = 70.5005. Their endowments are wa = 10, wa = 20, wz = 20, and wa = 10. (a) What is the formula for the contract curve? Draw an Edgeworth box and indicate the contract curve (b) What are the competitive equilibrium prices, where one price is normalized to equal one? (c) Confirm that the equilibrium outcome is Pareto optimal (i.e., it is on the contract curve)
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