In a pure exchange economy with two goods, G and H, the two traders, Amos and...

 

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In a pure exchange economy with two goods, G and H, the two traders, Amos and Elise, have Cobb-Douglas Utility functions. Amos's Utility is U, (G.)"(H.) and Elise's is U, (G.Y(H.). Between them, Amos and Elise own 100 units of G and 50 units of H. Thus if Amos has G. H, Elise has G, 100-G, and H, = 50- H %3D %3D %3D %3D a) Solve for the contract curve b) Solve for the contract curve if a = B [4marks] [4marks] c) What are the equilibrium competitive prices? [6marks] In a pure exchange economy with two goods, G and H, the two traders, Amos and Elise, have Cobb-Douglas Utility functions. Amos's Utility is U, (G.)"(H.) and Elise's is U, (G.Y(H.). Between them, Amos and Elise own 100 units of G and 50 units of H. Thus if Amos has G. H, Elise has G, 100-G, and H, = 50- H %3D %3D %3D %3D a) Solve for the contract curve b) Solve for the contract curve if a = B [4marks] [4marks] c) What are the equilibrium competitive prices? [6marks]

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