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Suppose there are two consumers, A and B. The utility functions of each consumer are given by: U A (X,Y) = X * Y U
Suppose there are two consumers, A and B.
The utility functions of each consumer are given by:
UA(X,Y) = X*Y
UB(X,Y) = X*Y3
Therefore:
For consumer A: MUX= Y; MUY= X
For consumer B: MUX= Y3; MUY= 3XY2
The initial endowments are:
A: X = 10; Y = 6
B: X = 14; Y = 19
How much of each good does each consumer demand in equilibrium?
Consumer A's Demand for X:
Consumer A's Demand for Y
Consumer B's demand for X
Consumer B's demand for Y
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