Unformatted text preview: about the parameters or functional forms of the utility and production functions U and F . In fact, a CE allocation may not even exist! For example, I can de&ne what a unicorn is, but simply because I de&ne something doesn±t mean it exists! I make assumptions on parameters and the functional forms to guarantee the existence and uniqeness of a CE allocation. Once I know the solution exists, I can begin to characterize its solution. I then derive a system of equations that any CE allocation must satisfy, pinning down all the CE allocations. Therefore, the unique allocation satisfying our usual system of equations characterizes our CE. This system solves all of our economic agents±optimization problems simultaneously and clears all markets simultaneously 1...
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This note was uploaded on 09/21/2011 for the course ECON 3102 taught by Professor Econ during the Summer '10 term at University of Minnesota Crookston.
- Summer '10