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For parts (e) - (g) below, let Px=1 and Py=2. e) Given Bruce's MRS at endowment would Bruce wish to buy or sell chocolate bars
For parts (e) - (g) below, let Px=1 and Py=2. e) Given Bruce's MRS at endowment would Bruce wish to buy or sell chocolate bars at these prices. Briefly explain (in words) your answer. f) Given Sheila's preferences, would she like to buy or sell chocolate bars at these prices? g) Is the price vector (1,2) a general equilibrium price vector? Briefly explain (in words). For the remainder of the question, let Px= Py=2 h) Find Bruce's best bundle at these prices. Find Sheila's best bundle at these prices. i) Show that at these prices both markets clear. Illustrate the budget line associated with the price vector (2,2) in your diagram above. Include in your diagram the best bundles and the indifference curves through those bundles
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