| Consider a two-consumer economy in which wA = (1,0), wB = (0, 1), u4(xf, x)...

 

Transcribed Image Text:

| Consider a two-consumer economy in which wA = (1,0), wB = (0, 1), u4(xf, x) =| xfa, and 2.xf +x if af < x5 a + 2x if af > x. uB (r,x) (a) [2] Derive a competitive equilibrium for this economy in which Pi/p; = 1. (b) [2] Illustrate the equilibrium from (a) in an Edgeworth box. (c) [2] Show that there does not exist a competitive equilibrium for this economy in which| Pi/p = /2. (d) [2] Show that this economy does not have any competitive equilibrium that differs from the one you found in (a). | Consider a two-consumer economy in which wA = (1,0), wB = (0, 1), u4(xf, x) =| xfa, and 2.xf +x if af < x5 a + 2x if af > x. uB (r,x) (a) [2] Derive a competitive equilibrium for this economy in which Pi/p; = 1. (b) [2] Illustrate the equilibrium from (a) in an Edgeworth box. (c) [2] Show that there does not exist a competitive equilibrium for this economy in which| Pi/p = /2. (d) [2] Show that this economy does not have any competitive equilibrium that differs from the one you found in (a).

Answer rating: 100% (QA)

Ang Given we2 co A A A B B B B f xB B 2 x xP2x B Xt2 i... View the full answer