PROBLEM SET 5

EXERCISE 5.5 Consider another pure exchange economy where consumers have preferences 14\" (x14, :13?) = (:13?) 1/2 (11/24) 1/2 and uB ($113,135) = ($113) 1/3 (9532/3, and the total endowments are col = 602 = 12. 1. Find the slope of the indifference curves of both agents in ((6,4) , (6,8)) 2. Is the allocation ((6,4), (6,8)) Paretoecient? What about ((6, 6)(6, 6))? 3. Find the relative price 3 that makes the allocation ((6,4), (6, 8)) a competitive equilib :02 rium