Answer to Question #90456 in Microeconomics for goodleaderson

Question

Consider an economy with 2 persons and 2 goods.
The utility functions of the 2 persons are
UA =XiAX2 ; UB =(X13Xil23+ 5)
2 and the initial
endowments are given to be
WA=(6, 2) and WB=(2, 6)
(a) Draw Edgeworth Box and show the initial
endowment of the economy.
(b) Find the set of Pareto efficient allocations
and show your result on the Edgeworth box.
(c) Find the competitive equilibrium of this
economy.

Answer 1

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