Question: Suppose there are two consumers, A and B, and two goods, X and Y.Consumer A is given an initial endowment of 2 units of good
Suppose there are two consumers, A and B, and two goods, X and Y.Consumer A is given an initial endowment of 2 units of good X and 4 units of good Y.Consumer B is given an initial endowment of 6 units of good X and 2 units of good Y.Consumer A's utility function is given by:
UA(X,Y) = 3X + Y,
and consumer B's utility function is given by
UB(X,Y) = MIN (X, 2Y).
If the prices are PX = 2 and PY = 1, if each consumer sells her initial endowment and buys back her optimal bundle, how much excess supply/ demand for good x, how much excess demand/supply for good y
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