Question: There are two people A B and two goods 1 2 One

There are two people (A&B) and two goods (1&2). One production process is available with a production function y2 (y1) = 2y1. The two people are endowed with a total of 60 units of good 1 (we do not know what is the division of wealth). The utility function are uA (x1A, x2A) = x1A x2A and uB (x1B, x2B) = x1B x2B
Verify if the following allocation are feasible & Pareto optimal.
(x1A, x2A) = (12,24) and (x1B, x2B) = (24,24)
(x1A, x2A) = (20,20) and (x1B, x2B) = (20,20)
(x1A, x2A) = (20,40) and (x1B, x2B) = (10,10)

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  • CreatedJuly 29, 2013
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