It's Econ 391

Abdul's utility is U (xA, YA) = min

Abdul's utility is = where *CA, and are his consumptions of goods x and y respectively. Babette's utility function is = XBYB, where and are her consumptions of goods x and y. Abdul's initial endowment is zero units of y and 6 units of x. Babette's initial endowment is zero units of x and 10 units of y 1.[3 marks] Draw the Edgeworth box with good x on the horizontal axis. The quantities of Abdul is measured from the lower left corner and the quantities of Babette is measured from the upper right corner. Mark the initial endowment and label it with E. Sketch two indifference curves for both agents. Don't forget to label the axis. 2.[5 marks] Find the Walrasian equilibrium prices and consumptions for Abdul and Babette by setting the good xnumeraire and p the price of good y. Show your equilibrium point on your Edgeworth box and label it with X.