Unformatted text preview: x 2 /(3 x 1 ). The good x 2 is the numéraire good ( p 2 = $1); for simplicity write p 1 as just p . Then males’ demand for good x 1 is x 1 = m M /2 p and for good x 2 is x 2 = m M /2, where m M refers to the income of males. Similarly, for females, the demand for good x 1 is x 1 = m F /4 p and for good x 2 is x 2 = 3 m F /4, where m F is the income of females. (a) Find the Walras price of x 1 and the Walras allocation for this economy. (b) Check that the Walras allocation you found is Pareto efficient....
View
Full Document
 Summer '07
 Dr.ShomuBanerjee
 Economics, Microeconomics, $1, Shomu Banerjee, good x2

Click to edit the document details