Question: 3 Question 3 [44 points) For this problem, round answers to 4 decimal places. Suppose there are two consumers, A and B, and two goods,


3 Question 3 [44 points) For this problem, round answers to 4 decimal places. Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 3 units of good X and 7 units of good Y. Consumer B is given an initial endowment of 8 units of good X and 5 units of good Y. Consumer A's utility function is given by: UA(X,Y] = X%Y% and Consumer B's utilityr function is given by U3(X,Y) = X Yg. Therefore, the marginal utilities are as follows: nah- MUjf = X'iY MU}; : lollL um: o-lt-I Moi; : x- Y My; : gxy call- e) (20 points) Illustrate the situation in an Edgeworth Box. Be sure to label your box carefully and accurately. Identify the initial endowment and label it W. Identify the competitive equilibrium and label it D. Draw the budget constraint that each consumer faces and identify the values where it intersects the perimeter of the Edgeworth Box (there are 2 different intercepts to identify for each consumer)
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