| Consider a two-consumer economy in which wA = (1,0), wB = (0, 1), u4(xf, x)...
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| Consider a two-consumer economy in which wA = (1,0), wB = (0, 1), u4(xf, x) =| xfa, and 2.xf +x if af < x5 a + 2x if af > x. uB (r,x) (a) [2] Derive a competitive equilibrium for this economy in which Pi/p; = 1. (b) [2] Illustrate the equilibrium from (a) in an Edgeworth box. (c) [2] Show that there does not exist a competitive equilibrium for this economy in which| Pi/p = /2. (d) [2] Show that this economy does not have any competitive equilibrium that differs from the one you found in (a). | Consider a two-consumer economy in which wA = (1,0), wB = (0, 1), u4(xf, x) =| xfa, and 2.xf +x if af < x5 a + 2x if af > x. uB (r,x) (a) [2] Derive a competitive equilibrium for this economy in which Pi/p; = 1. (b) [2] Illustrate the equilibrium from (a) in an Edgeworth box. (c) [2] Show that there does not exist a competitive equilibrium for this economy in which| Pi/p = /2. (d) [2] Show that this economy does not have any competitive equilibrium that differs from the one you found in (a).
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