Question
Suppose there are two consumers, A and B. The utility functions of each consumer are given by: UA(X,Y) = X2Y UB(X,Y) = X*Y2 Therefore: For
Suppose there are two consumers, A and B.
The utility functions of each consumer are given by:
UA(X,Y) = X2Y
UB(X,Y) = X*Y2
Therefore:
- For consumer A: MUX= 2XY; MUY= X2
- For consumer B: MUX= Y2; MUY= 2XY
The initial endowments are:
A: X = 30; Y = 90
B: X = 15; Y = 60
a)(20 points) Suppose the price of Y, PY= 1.Calculate the price of X, PXthat will lead to a competitive equilibrium.
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Economics
Authors: Paul A. Samuelson, William Nordhaus
19th edition
978-0073511290, 73511293, 978-0073344232, 73344230, 978-007351129
