1. Suppose there are 15 agents, ten of whom have income mi = 10 and five...

 

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1. Suppose there are 15 agents, ten of whom have income mi = 10 and five of whom have income m'= 20. Each agent has a symmetric Cobb-Douglas utility representing their preferences: u'x1; x2) = xIx2 Furthermore, suppose there are 9 identical firms producing good x1with pro- duction function: flz1,22) = z1/321/3 The input prices are denoted by w1 and w2. Suppose all firms and consumers are price takers. (a) Compute market demand for x1: (b) Compute market supply for good x1: (C) Compute the short-run equilibrium price and the short-run equilibrium quantity for good x1: 1. Suppose there are 15 agents, ten of whom have income mi = 10 and five of whom have income m'= 20. Each agent has a symmetric Cobb-Douglas utility representing their preferences: u'x1; x2) = xIx2 Furthermore, suppose there are 9 identical firms producing good x1with pro- duction function: flz1,22) = z1/321/3 The input prices are denoted by w1 and w2. Suppose all firms and consumers are price takers. (a) Compute market demand for x1: (b) Compute market supply for good x1: (C) Compute the short-run equilibrium price and the short-run equilibrium quantity for good x1:

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