Quiz 7 - X that will lead to equilibrium. P X = 1/5 b) (4...

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Econ 302 Quiz 7 McLeod Name ______________________________ ID # ____________________________ 1. Suppose there are two consumers, A and B. The utility functions of each consumer are given by: U A (X,Y) = X 2 Y U B (X,Y) = X*Y Therefore: For consumer A: MU X = 2XY; MU Y = X 2 For consumer B: MU X = Y; MU Y = X The initial endowments are: A: X = 70 Y = 16 B: X = 80; Y = 4 a) (12 points) Suppose the price of y, P Y = 1. Calculate the price of X, P
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Unformatted text preview: X that will lead to equilibrium. P X = 1/5 b) (4 points) How much of each good does each consumer demand in equilibrium? Consumer As Demand for X: 100 Consumer As Demand for Y: 10 Consumer Bs demand for X: 50 Consumer Bs demand for Y: 10 c) (4 points) What is the marginal rate of substitution for consumer A at the competitive equilibrium? The MRS for consumer A = -1/5...
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Quiz 7 - X that will lead to equilibrium. P X = 1/5 b) (4...

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