Intermediate Microeconomics: A Modern Approach, Seventh Edition

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Overview Consumer Theory Producer Theory Exchange
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Edgeworth Box Contract Curve All Possible Exchange Points
Image of page 2
Overview Consumer Theory Producer Theory Exchange Walrasian Equilibrium (Multiplicity)
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Walrasian Equilibrium Requirements: 1) Full information 2) “Smooth Indifference Curves” (Convex, continuous, monotonic) 3) Interior Solution 4) No Externalities Outcome: Welfare Thoerems 1) If (x,p) is a Warasian equilibrium, then x is Pareto Efficient 2) Suppose x is a PE allocation in which each agent holds a positive amount of each good. If preferences are convex, continuous, and monotonic, there exists an initial endowment for which x is a Walrasian Equilibrium.
Image of page 4