Answer to Question #173420 in Microeconomics for pravakar

Question

Consider a pure-exchange economy of two individuals (A and B) and two goods (X and Y). Assume both the individuals are endowed with 2 units of good X and 1 unit of good Y each.

Let utility functions of individual A and B be UA = min{XA,YA} and UB = min{𝑋𝐵4,YB}, where Xi and Yi for i = {A, B} represent individual i’s consumption of good X and Y respectively. Determine the aggregate excess demand functions for each good.

Answer 1

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