Question: Problem 2.2 Consider a situation with just two commodities. Let the endow- ment of some agent be w = (3, 2), and let the
Problem 2.2 Consider a situation with just two commodities. Let the endow- ment of some agent be w = (3, 2), and let the price vector be p := (1, 2). (a) Draw a two-dimensional coordinate system. Make a dot at w, and draw the price vector as an arrow, starting at the point w. Now compute different combinations of quantities of commodities 1 and 2 that the agent can just afford. The resulting set is called the budget line. Judging by visual inspection, is the budget line you have drawn a straight line? Is the price vector orthogonal to the budget line?
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