1. Say two customers have identical Cobb-Douglas utilities ua = a and up a , endowments...

   

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1. Say two customers have identical Cobb-Douglas utilities ua = a and up a , endowments wA = (2,0) and wB = (3,0), and there is a production technology (), Person A owns the firm. Find the competitive equilibrium allocation and prices, the equation for the contract curve, and graph these. 2. Now consider the same consumers as problem 1.), but assume instead there is a linear production technology 2 = 2y1 owned by person A. Find the competitive equilibrium allocation and prices, the equation for the contract curve, and graph these. 3. Now say person A has utility ua = In(r)+ (r+ ) and person B has utility uB = In(r)+(+). That is, good 2 is a public good. Technology and endowments are as in problem 2.), y2 = 2y1 and wa = (2,0) and wB = (3,0). Find the competitive equilibrium allocation and prices, and the equation for the contract curve. %3D !! 1. Say two customers have identical Cobb-Douglas utilities ua = a and up a , endowments wA = (2,0) and wB = (3,0), and there is a production technology (), Person A owns the firm. Find the competitive equilibrium allocation and prices, the equation for the contract curve, and graph these. 2. Now consider the same consumers as problem 1.), but assume instead there is a linear production technology 2 = 2y1 owned by person A. Find the competitive equilibrium allocation and prices, the equation for the contract curve, and graph these. 3. Now say person A has utility ua = In(r)+ (r+ ) and person B has utility uB = In(r)+(+). That is, good 2 is a public good. Technology and endowments are as in problem 2.), y2 = 2y1 and wa = (2,0) and wB = (3,0). Find the competitive equilibrium allocation and prices, and the equation for the contract curve. %3D !!

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