Answer to Question #289844 in Microeconomics for Alemu

Question

8) An exchange economy comprising consumer 1 with Symmetric Cobb Douglas (CD) utility 

function and 2 with Leontief utility function

 

( ) and 

( ) * + 

 and initial endowments available for each person to trade are: 

 ( ) ( )

 ( ) ( )

 Price of good 1, 

a. Find the competitive equilibrium demands of person 1 and 2 for each good? 

b. Find market clearing prices?

Answer 1

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