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Unformatted text preview: Problem Set 5 PE in Exchange Economies Instructor: Todd Sarver Econ 310-2, Fall 2011 TA: Robert Molony (Any email questions regarding this PS should be sent to this TA.) Complete all problems and explain your answers carefully. This problem set is due on Thursday, November 10 at 4:45pm in the mailbox labeled Todd Sarver in the Economics Department main office (302 Andersen Hall). At the top of your assignment, please include the TA whose discussion session you attend (Guannan, Robert, Esteban) and the day that you attend (Monday, Friday). 1 PE in an Exchange Economy Suppose there are two consumers, 1 and 2, with the following utility functions for goods x and y : u 1 ( x 1 ,y 1 ) = x 1 y 1 u 2 ( x 2 ,y 2 ) = x 2 + y 2 Suppose there are e x = 12 units of good x and e y = 8 units of good y in the economy. Find the set of Pareto efficient allocations for this economy. Draw an Edgeworth box for this economy and draw the contract curve. (Note: You do not need to solve for the exact shape of indifference curvesdraw the contract curve....
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