Question: 17.6 In Example 17.5 each individual has an initial endowment of 500 units of each good. a. Express the demand for Smith and Jones for

17.6 In Example 17.5 each individual has an initial endowment of 500 units of each good.

a. Express the demand for Smith and Jones for goods Xand Fas functions of Pxand Pj and their initial endowments.

b. Use the demand functions from part

(a) together with the observation that total de mand for each good must be 1000 to calculate the equilibrium price ratio, Px/Pv, in this situation. What are the equilibrium consumption levels of each good by each person?

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