2010 slides_ge - 1 General Equilibrium 2 types of agents in...

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1 General Equilibrium 2 types of agents in a pure exchange economy: Edge- worth box. Equal numbers of 2 type of agents: Jack and Mary. 2 goods, apples and oranges. Jack has A j and O j apples and oranges respectively. Mary has A m and O m respectively. Positive analysis: How do they trade? How are rela- tive prices are determined in a competitive market? Normative analysis: What kind welfare properties does a competitive equilibrium have?
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In an Edgeworth box, the horizontal length is the endowments of oranges. All allocations within an Edgeworth box is an allo- allocations start from the origin {0,0}. So if we con- sider the allocation f A;O g . Then we say Jack gets A apples and O oranges. A j + A m ± A apples and O j + O m ± O at the North East corner of the Edgeworth Box. Jack has standard indi/erence curves for apples and
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This note was uploaded on 04/10/2010 for the course ECO ECO200 taught by Professor Carlosserrano during the Spring '10 term at University of Toronto- Toronto.

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2010 slides_ge - 1 General Equilibrium 2 types of agents in...

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