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Unformatted text preview: on the contract curve where Tony receives G t units of G . Now, since the indi/erent curves have to be tangent: MRS t = MRS m & H t G t = & H 2 m 2 G m H m H t G t = H m 2 G m Now, recognize that H m = 50 & H t and G m = 100 & G t . So, H t G t = 50 & H t 2 (100 & G t ) 200 H t & 2 G t H t = 50 G t & G t H t 200 H t & G t H t = 50 G t H t = 50 G t 200 & G t So the contract curve is given by H t ( G t ) = 50 G t 200 & G t . 2...
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This note was uploaded on 07/22/2008 for the course ECON 100B taught by Professor Rauch during the Spring '07 term at UCSD.
 Spring '07
 RAUCH

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