Question
Consider an economy with L = 2 goods and M = 2 consumers. Consumers i = 1,2 have utility functions 1(x11, X12) = a
Consider an economy with L = 2 goods and M = 2 consumers. Consumers i = 1,2 have utility functions 1(x11, X12) = a In x1+(1-a) ln x12 12(x21, X22) = Blnx21+(1-5) In x22 (6) (a) Solve for the Walrasian demand functions of each consumer, assuming agent i = 1,2 has an endowment of goods w, >> 0. (b) Let w = (1,0) and wz= (0,1). Solve for an equilibrium of this economy.
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