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Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y). Individual A is endowed with 1 unit of good
Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y). Individual A is endowed with 1 unit of good X and none of good Y, while individual B with 1 unit of good Y and none of good X. Assuming utility function of individual A and B to be UA = (XA) (YA) 1 and UB = (XB) (YB) 1 where Xi and Yi for i = {A, B} represent individual i's consumption of good X and Y, respectively. Determine the Walrasian equilibrium price ratio.
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