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Assume there are two persons and 2 goods in a economy without production. En- dowments are as follows: (w1,1, w1,2) = (10,3) and (w/2,1, w/2,2)
Assume there are two persons and 2 goods in a economy without production. En- dowments are as follows: (w1,1, w1,2) = (10,3) and (w/2,1, w/2,2) = (8,9). Both persons are Cobb-Douglas utility maximizers. Person 1 behaves as if maximizing a utility func- tion #1($1,1, $12) = $1 2 and person 2 behaves as if maximizing a utility function uz(12,1, 12,2) = 12142,2- . Calculate the General Equilibrium of this economy. . Repeat this problem with different exponents for the consumers (for example, #1($1,1, I1,2) = 1,IT12 and u2(12,1, 12,2) = 1, 12.) Change the exponents as much as needed until you feel comfortable with solving these problems. . Repeat this problem with different endowments. Change the endowments as much as needed until you feel comfortable
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