Question
Suppose Jack and Jill have the same (convex) preferences: U ( C , F ) = C*F^2 Where F is the quantity of food and
Suppose Jack and Jill have the same (convex) preferences:
U ( C , F ) = C*F^2
Where F is the quantity of food and C is the quantity of clothing
Jack and Jill have endowments:
Jack: 8 Clothing, 2 Food
Jill: 2 Clothing, 8 Food
a). Suppose Jack trades 3 units of Clothing for 3 units of Food from Jill. Is the new allocation Pareto Efficient? Does the new allocation represent a competitive equilibrium?
b). What if Jack trades 4 units of Clothing for 2 units of Food from Jill. Is the new allocation Pareto Efficient? Does the new allocation represent a competitive equilibrium?
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The Accounting And Financial Audit
Authors: Landry Kouamé
1st Edition
620430481X, 978-6204304816
