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Unformatted text preview: n X i =1 ¯ x i + c (¯ y ) = n X i =1 ω ix . 3. Consider a simple economy with 2 consumers, one private good x , and one public good y . Consumer 1 has endowment ω 1 = ( ω 1 x ,ω 1 y ) = (100 , 0) and utility function u 1 ( x,y ) = 2 √ y + x. Consumer 2 has endowment ω 2 = ( ω 2 x ,ω 2 y ) = (200 , 0) and utility function u 2 ( x,y ) = 2 √ y + x. Each unit of the public good requires one unit of the private good as input. a. Why are there many Pareto optimal allocations even though there is only one Pareto optimal level of the public good? 1 b. Find a Lindal equilibrium and verify that it is Pareto optimal. 4. Exercise 11.B.2. 5. Exercise 11.D.2. 2...
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This note was uploaded on 12/26/2011 for the course ECON 210C taught by Professor Qin during the Fall '09 term at UCSB.
- Fall '09