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The utility functions of each consumer are given by: U A (X,Y) = X * Y U B (X,Y) = X*Y 3 Therefore: For consumer
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 = 8; Y = 6
B: X = 14; Y = 17
a) (40 points) Suppose the price of Y, PY = 1. Calculate the price of X, PX that will lead to a competitive equilibrium.
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