Economics 100BDueMay 25, 2010MicroeconomicsSpring 2010James RauchPROBLEM SET 5: General Equilibrium and Economic Welfare with two marketsConsider an economy populated by a representative consumer with preferences givenby U(X,Y) = X Y and endowment (,) = (10,15).2yx1.Let Y be the numeraire good, i.e., set p = 1. Find p that clears the X market.2.Using your answer to problem 1, find the value of consumer income.3.Using your answers to problems 1 and 2, verify that Walras’ Law holds, i.e.,
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