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Bobs utility function is UB xB1 ;xB2 = xB1 2 xB2 . (a) Draw an Edgeworth box for this economy. Identify the set of e
Bobs utility function is UB xB1 ;xB2 = xB1 2 xB2 . (a) Draw an Edgeworth box for this economy. Identify the set of e cient allocations for this economy, and illustrate them in the Edgeworth box. (b) Dene competitive equilibrium. Suppose that Alice is endowed with 10 units of both good 1 and good 2, and Bob with 10 units of both good 1 and good 2 as well. Find the competitive equilibrium for this economy (Let good 1 be the numeraire)
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