Question: N=0, please help me walk through this problem step by step Problem 4: Consider a pure exchange economy with only two goods, X and Y,

N=0, please help me walk through this problem step by step

N=0, please help me walk through this problem step by step Problem

Problem 4: Consider a pure exchange economy with only two goods, X and Y, and two consumers, Amaira and Bilal. The utility function of Amaira is UA(XA,YA) = (N+1)xA + yA whereas the utility function of Bilal is UB(XB,yB) = min (XB,2yB). The total endowment of good X in this economy is 30 units and the total endowment of good Y is also 30 units. a) Is the allocation (XA,YA) = (5,0), (XB.yB) = (25,30) Pareto efficient? Explain. Find the equation for the contract curve. b) Suppose that at the initial endowment allocation Amaira and Bilal have exactly the same amount of both goods (15 units of each good both). What would be the Walrasian (competitive) equilibrium price ratio p/py of this economy? c) Find one new initial endowment allocation such that the equilibrium allocation of the economy would be now (XA,YA) = (0,15), (xB,yB) = (30,15). (Note: There are many possible endowment allocations that will do the trick; you are just asked to show formally that the one you chose supports (XA,YA) = (0,15), (XB,yB) = (30,15) as the new equilibrium of the economy)

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