Question: True or False, plus an explanation please. 4. Consider a general equilibrium model where there are two persons, A and B, and two goods, 1

 True or False, plus an explanation please. 4. Consider a general

True or False, plus an explanation please.

equilibrium model where there are two persons, A and B, and two

4. 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 find the equilibrium price ratio). Person A has 6 units of good 1 and 3 units of good 2 while person B has 4 units of good 1 and 5 units of good 2. Person A's utility is represented by UA= 3In (x4) +2In (x2 ) and person B's utility is given by UB= 2In (x7 ) +3 In (x5 ). The corresponding Marshallian demands are given by x4 = (3/5) (m^/P, ), x2 = (2/5) (mA/p2), x1 = (2/5) (m /p,), and x2 = (3/5) (mB/p2), where m' is the income of person j = A, B. The allocation x4= (6.0, 6.0) and x- (4.0, 2.0) is feasible and Pareto efficient

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