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Unformatted text preview: 5. Lil Jon (consumer 1) and the East Side Boyz (consumer 2) are the competitive consumers in the economy. Their endowments of Yeah! (good 1) and OK! (good 2) are ) 5 , 10 ( LilJon e and ) 10 , 5 ( EastSide e , respectively. Lil Jons demand functions for Yeah! and OK! are 1 1 P m X LilJon LilJon and 2 2 ) 1 ( P m X LilJon LilJon . The East Side Boyz demand functions are analogous, 1 1 P m X EastSide EastSide and 2 2 ) 1 ( P m X EastSide EastSide . Show that if 5 . , the equilibrium prices cannot be 2 1 P , and 3 2 P . 6. Given the conditions in Question 5 (using generally), what are the two equations which determine the equilibrium prices in the economy? Now normalize 1 1 P . Solve for the equilibrium prices if 5 . . Solve for the equilibrium prices if 25 . ....
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This note was uploaded on 02/23/2012 for the course ECON 201 taught by Professor Ninkovic during the Spring '08 term at Emory.
- Spring '08