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) Now let m = L = 2. Consumer 1's endowment is (0, 1) where 0 is consumer 1's endowment of goods 1 and 1
) Now let m = L = 2. Consumer 1's endowment is (0, 1) where 0 is consumer 1's endowment of goods 1 and 1 his endowment of goods 2. Consumer 2's endowment is (1, 0). Consumer 1's utility function is U 1 (x 1 1 , x1 2 ) = ln(x 1 1 ) + 2 ln(x 1 2 ), where x 1 1 > 0 is consumer 1's consumption of goods 1 and x 1 2 > 0 his consumption of goods 2. Consumer 2's utility function has the form U 2 (x 2 1 , x2 2 ) = (x 2 1 ) ^0.5 (x 2 2 ) ^0.5 . Find the competitive equilibrium in this economy (normalise the price of goods 1 by 1.)
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