Question: Q2. A representative individual has a utility function U = xy. The marginal utility of x (MUx) is y, the marginal utility of y (MU)

Q2. A representative individual has a utility function U = xy.

Q2. A representative individual has a utility function U = xy. The marginal utility of x (MUx) is y, the marginal utility of y (MU) is y. The production function for good X is x = Lx and good Y is y = Ly. The marginal cost of good X (MCx) is 2wx and the marginal cost of good Y MCyis 2wy where w is wage. There are 200 units of labor in this economy. (a) Companies maximize profits and individuals maximize utility. In this case, calculate the output of X and Y (b) Find the general equilibrium price. (Hint; express the price of x (and y) as a function of wage) Q2. A representative individual has a utility function U = xy. The marginal utility of x (MUx) is y, the marginal utility of y (MU) is y. The production function for good X is x = Lx and good Y is y = Ly. The marginal cost of good X (MCx) is 2wx and the marginal cost of good Y MCyis 2wy where w is wage. There are 200 units of labor in this economy. (a) Companies maximize profits and individuals maximize utility. In this case, calculate the output of X and Y (b) Find the general equilibrium price. (Hint; express the price of x (and y) as a function of wage)

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