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In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas util- ity functions. Amos' utility is U. = (G.)(Ha)]
In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas util- ity functions. Amos' utility is U. = (G.)"(Ha)] - and Elise's is U. = (G.)B(H.)1-B. What are their marginal rates of substitution? Between them, Amos and Elise own 100 units of G and 50 units of H. Thus, if Amos has G. and Ha, Elise has G. = 100 - G. and He = 50 - Ha. Solve for their contract curve. Show all your calculations clearly, from your marginal utilities
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