Question
Consider the pure exchange economy with 2 goods, good 1 and good 2, and two consumers, consumer A and consumer B.The consumers have the following
Consider the pure exchange economy with 2 goods, good 1 and good 2, and two consumers, consumer A and consumer B.The consumers have the following utility functions: uA(x1A,x2A)=x1A+3x2A; uB(x1B,x2B)=x1B+x2B.Consumer A is initially endowed with 4 units of good A and no unit of good 2, that is, consumer A's initial endowment is (1A,2A)=(4,0).Consumer B is initially endowed with 3 units of good 2 and no unit of good 1, that is, (1B,2B)=(0,3).In order to implement the allocation (x1A,x2A)=(0,1), (x1B,x2B)=(4,2) as a Walrasian equilibrium, what should the relative price p1/p2of good 1 be?
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