Find the Marshallian demands for the two goods Amy and Bob as functions only of prices p1, p2 of the two goods. (5 marks) (ii) Using your answers in (i), find the Walrasian equilibrium prices. Is there a unique Walrasian equilibrium? [Hint: take good 2 as the numeraire] (5 marks) (iii) Using your answers in (ii), find the Walrasian allocation for each of Amy and Bob. How does this allocation depend on the preference parameters? Comment on what you find

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To find the Marshallian demands for the two goods Amy denoted as x1 and Bob denoted as x2 we need to determine their optimal consumption bundles given ... View the full answer