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Consider a two-consumer economy in which wA min{x, x} for J = A, B. = = wB (1,0), (0, 1) and u (x1, x2)
Consider a two-consumer economy in which wA min{x, x} for J = A, B. = = wB (1,0), (0, 1) and u (x1, x2) = (a) Derive a competitive equilibrium for this economy in which p/p = 1. (b) Illustrate the equilibrium from (a) in an Edgeworth box. (c) Derive a competitive equilibrium for this economy in which P/p = 1/3. (d) Illustrate the equilibrium from (c) in an Edgeworth box. (e) What other prices can be supported as part of some competitive equilibrium?
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