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Unformatted text preview: lny . Their intitial endowments are e a = (1 ; 0) ; e b = (0 ; 1) ; and e c = (1 ; 1) : Find the competitive equilibirum allocations for this economy. 4. Ex. 18.2, p.357 in Varian. 5. Consider a pureexchange economy with 2 agents ( 1 and 2) and two goods, x and y: Their utility functions are as follows U 1 ( x 1 ; y 1 ) = min f x 1 ; y 1 g U 2 ( x 2 ; y 2 ) = & ln x 2 + (1 & a ) ln y 2 where x i and y i denote consumption levels for agent i = 1 ; 2 : Suppose the initial endowments are e x 1 = 0 ; e y 1 = 10 ; e x 2 = 10 ; and e y 2 = 0 : A. Calculate a competitive equilibrium for this economy. B. Can you &nd an allocation other than the competitive equilibrium allocation that is Pareto superior to the competitive equilibrium allocation? 1...
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 Fall '08
 skaperdas

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