Alice (A) and Bob (B) are trapped in a shelter against zombies. They consume the only...

  

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Alice (A) and Bob (B) are trapped in a shelter against zombies. They consume the only two goods available, cider (C) and dumplings (D). Anne has an initial endowment of 80 bottles of cider and 90 dumplings. Bob has an initial endowment of 20 bottles of cider and 10 dumplings. Alice's utility function is UA(CA,DA) = (N+1)CA + (N+2)DA, where CA and Da represent her consumption of cider and dumplings, respectively. Bob's utility function is UB(CB,DB) = CBDB, where CB and DB denote his consumption of cider and dumplings, respectively. Find the ratio of prices at the competitive equilibrium of this exchange economy and the resulting equilibrium allocation. Alice (A) and Bob (B) are trapped in a shelter against zombies. They consume the only two goods available, cider (C) and dumplings (D). Anne has an initial endowment of 80 bottles of cider and 90 dumplings. Bob has an initial endowment of 20 bottles of cider and 10 dumplings. Alice's utility function is UA(CA,DA) = (N+1)CA + (N+2)DA, where CA and Da represent her consumption of cider and dumplings, respectively. Bob's utility function is UB(CB,DB) = CBDB, where CB and DB denote his consumption of cider and dumplings, respectively. Find the ratio of prices at the competitive equilibrium of this exchange economy and the resulting equilibrium allocation.

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A consumer will be in equilibrium when MU of X price of X MU of Y price of Y ie MU of X MU of Y Pric... View the full answer