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Consider the following pure exchange, Edgeworth box economy. There are 2 consumers and 2 goods. Consumer 1 has an endowment of 3 units of good
Consider the following pure exchange, Edgeworth box economy. There are 2 consumers and 2 goods. Consumer 1 has an endowment of 3 units of good Y, while consumer 2 has an endowment of 3 units of good X. For both consumers the utility function is given by: U (x, v) = x^2y, where x and y denote the respective quantities of goods X and Y. Find the Walrasian equilibrium price ratio P/Pr and the Walrasian allocations. Does trade take place in equilibrium?
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