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Hello, i have a difficult time solving this question... Consider a barter economy with 2 agents: Adam (A) and Birthe (B). They have preferences over
Hello, i have a difficult time solving this question...
Consider a barter economy with 2 agents: Adam (A) and Birthe (B). They have preferences over two goods 1 and 2.
Adam has a utility function:uA=minx1A,x2A
Birthe has a utility function: uB=sqrt(x1B)sqrt(x2B)
Adam is born with the the initial inventory (w1A,w2A)=(20,0)
Birthe has the initial inventory: (w1B,w2B)=(0,10)
The question is
2d) Find the market equilibrium (normalize the price of good 1 and 2)
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