Question
Suppose there are two consumers, A and B, and two goods, X and Y.Consumer A is given an initial endowment of 30 units of good
Suppose there are two consumers, A and B, and two goods, X and Y.Consumer A is given an initial endowment of 30 units of good X and 5 units of good Y.Consumer B is given an initial endowment of 90 units of good X and 5 units of good Y.Consumer A's utility function is given by:
UA(X,Y) = X*Y,
and consumer B's utility function is given by
UB(X,Y) = X3*Y.
Therefore, consumer A's marginal utilities for each good are given by:
MUX = Y
MUY = X
Also, consumer B's marginal utilities for each good are given by:
MUX = 3X2Y
MUY = X3
Suppose the price of good Y is equal to one.What is the price of good X that will lead to a competitive equilibrium?
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