Question: i need help with the following 03(20): Consider a general equilibrium model where there are two persons, A and B, and two goods,1 and 2

 i need help with the following 03(20): Consider a general equilibrium

i need help with the following

model where there are two persons, A and B, and two goods,1

03(20): Consider a general equilibrium model where there are two persons, A and B, and two goods,1 and 2 (good 2 is the "numeraire," i.e., its price can be normalized to unit once you nd the equilibrium price ratio). Person A has T units of good 1 and 10 units of good 2 while person B has 3 units of good 'I and 5 units of good 2. Person A's utility is represented by U\": 2 In (2311') + 3 In (X25) and person B's utility is given by UB = 3 In (X13) + 2 In (X23)- a) Find the marginal rates of substitution for both persons. Examine if the following three allocations are feasible and (for feasible allocations only) Pareto efcient: 1) xi: (3, 6) and x5: (7, 9) 2) x\": (s, 9) and x5 = (9, e.) 3) x\" = (5,10) and x3: (3, 4) b) Identify the income of each of the consumers and derive their gross demand functions. Derive their individual excess demand functions for both goods. c) Derive the aggregate excess demands both goods and Find the general equilibrium {i.e., the equilibrium price ratio) Given the price ratio you found. nd the nal allocation of goods. Round your numbers to the third decimal place. d) Show in an Edgeworlh box the initial allocation of endowment W, the optimal allocation of consumption M, the price line, and two consumers' indifference curves which go through the optimal allocation of consumption

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