ANSWERS EXTRA PROBLEM FOR HOMEWORK SET 3

2 3 2 3 6 7 6 7 3picknumericalvaluesfor and

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: nd the demands for each of these goods for each agent. The first‐order conditions for this problem are: 2 4 and ⇒ The first two conditions imply: 2 From the budget constraint, we then have: ⇒ 3 and 3 For Person B: 12 2 and The first two conditions imply: 12 2 ⇒6 ⇒ 6 From the budget constraint, we then have: 7 6 ⇒ 6 6 7 and 2. Form the excess demands for each of these consumers. 2 3 2 3 6 7 6 7 3. Pick numerical values for and . Then find the market‐ clearing relative price P* and the consumption allocations. Impose the market clearing...
View Full Document

This document was uploaded on 02/07/2014.

Ask a homework question - tutors are online