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Consider an economy populated by two individuals Hans and Franz. They both share the same preferences over two goods 1 and 2, represented by the
Consider an economy populated by two individuals Hans and Franz. They both share the same preferences over two goods 1 and 2, represented by the utility function u(x1, x2) = x1x2. Let w1,w2 denote the total amount of good 1 and 2 available.
(a) Find the equation of the contract curve. Are there any pareto efficient allocations that are not included in it?
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