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ECON201B 2006 PS1

# ECON201B 2006 PS1 - Economics 201B 2nd Half Spring 2006 Due...

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Problem Set 1 Economics 201B 2nd Half - Spring 2006 Due Thursday, 23 March in Lecture A word about notation: throughout this course, we° ll often be dealing with economies with multiple agents and multiple goods, which can make interpreting subscripts and superscripts somewhat di¢ cult if we°re not all using the same system. Thus, when describing an alloca- tion of goods, please use notation such as x 1 b to indicate, for example, agent b °s allocation of good 1 . That is, let the ±rst subscript identify the good, and the second subscript identify the agent (usually with a letter). Further, denote agent b °s allocation of all goods by the vector x b . Thank you! 1. Consider Problem (P), indicated below, in an Edgeworth Box economy with individuals a and b and goods 1 and 2 : max x a ;x b U a ( x a ) s.t : U b ( x b ) ° ° U b x a + x b ± w a + w b x a ; x b ° 0 Assume that each consumer°s utility function is continuous and strongly monotone.

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ECON201B 2006 PS1 - Economics 201B 2nd Half Spring 2006 Due...

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