Question
Consider the pure exchange economy with 2 goods, good 1 and good 2, and two consumers, consumer A and consumer B.Consumer B is initially endowed
Consider the pure exchange economy with 2 goods, good 1 and good 2, and two consumers, consumer A and consumer B.Consumer B is initially endowed with 10 units of each good.Consumer A is not endowed with any quantity of either good (that is, his initial endowments is (1A,2A)=(0,0)). The consumers have the following Cobb-Douglas utility functions: uA(x1A,x2A)=x1Ax2A2; uB(x1B,x2B)=x1B2x2B.Among the prices below, which ones are Walrasian equilibrium prices?
*SHOW WORK*****
a. p1=20,p2=30
b. None of the other answers.
c. p1=10,p2=20
d. p1=20,p2=10
e. p1=30,p2=10
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