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Felix's utility is u(x, y) = xy while Maria's utility is u(x, y) = min{x, y). Felix has an initial endowment of (wx, w;)=(0, 10)
Felix's utility is u(x, y) = xy while Maria's utility is u(x, y) = min{x, y). Felix has an initial endowment of (wx, w;)=(0, 10) and Maria has an endowment of (w}, wy)=(20, 5). a) If px = 1, find the equilibrium demand for Frank and Maria for good y in terms of Py. b) If px = 1, find the equilibrium demand for Felix and Maria for good x in terms of Py. c) What is the equilibrium price ratio p = Py/Px?d) Demonstrate. using the consumers' utility functions, that both consumers have greater utility at the equilibrium allocation. e] Draw the Edgeworth box associated with this problem, clearly labeling the initial endowment, the equilibrium allocation, and including at least one labeled indifference Curve for each individual
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