2.) (20 points total) Suppose there are two consumers with different utility functions but the same...

 

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2.) (20 points total) Suppose there are two consumers with different utility functions but the same initial endowments. Consumer 1: u₁ (9₁,92) = 9192 11 Consumer 2: u₂(q₁,92) = 99² Initial endowment for consumer 1 = (10,10) = initial endowment for consumer 2 a. (10 points) Given this information, draw the Edgeworth box with correct height and length, draw the initial endowment point E₁ and accurate IC curves for both consumers that go through the initial endowment. Label everything! C. b. (5 points) Is the initial endowment Pareto efficient? Why or why not? Show your work. (5 points) What prices p₁ and p2 would result in a competitive equilibrium at the initial endowment? 2.) (20 points total) Suppose there are two consumers with different utility functions but the same initial endowments. Consumer 1: u₁ (9₁,92) = 9192 11 Consumer 2: u₂(q₁,92) = 99² Initial endowment for consumer 1 = (10,10) = initial endowment for consumer 2 a. (10 points) Given this information, draw the Edgeworth box with correct height and length, draw the initial endowment point E₁ and accurate IC curves for both consumers that go through the initial endowment. Label everything! C. b. (5 points) Is the initial endowment Pareto efficient? Why or why not? Show your work. (5 points) What prices p₁ and p2 would result in a competitive equilibrium at the initial endowment?

Answer rating: 100% (QA)

a To begin lets plot the initial endowment point E and the indifference curves IC for both consumers ... View the full answer