Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A's utility function is given by: UA(X. Y) = X*Y3 And consumer B's utility function is given by UB(X,Y) = X*Y. Therefore, consumer A's marginal utilities for each good are given by: MUy = Y3 MUy=3X*Y2 Also, consumer B's marginal utilities for each good are given by: MUx= Y MUy = X Initial Endowments are given by Person A has 40 units of good X and 20 units of good Y. Person B has 30 units of good X and 20 units of good Y. Suppose Py = 1, a) What is the value of Py that will result in a competitive equilibrium? (Ans: Py=1/3, but I don't know why) b) How much of each good will each consumer demand in equilibrium
Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A's utility function is given by: UA(X. Y) = X*Y3 And consumer B's utility function is given by UB(X,Y) = X*Y. Therefore, consumer A's marginal utilities for each good are given by: MUy = Y3 MUy=3X*Y2 Also, consumer B's marginal utilities for each good are given by: MUx= Y MUy = X Initial Endowments are given by Person A has 40 units of good X and 20 units of good Y. Person B has 30 units of good X and 20 units of good Y. Suppose Py = 1, a) What is the value of Py that will result in a competitive equilibrium? (Ans: Py=1/3, but I don't know why) b) How much of each good will each consumer demand in equilibrium
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter7: Analytic Trigonometry
Section7.6: The Inverse Trigonometric Functions
Problem 92E
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Question
Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A's utility function is
given by:
UA(X. Y) = X*Y3
And consumer B's utility function is given by
UB(X,Y) = X*Y.
Therefore, consumer A's marginal utilities for each good are given by:
MUy = Y3
MUy=3X*Y2
Also, consumer B's marginal utilities for each good are given by:
MUx= Y
MUy = X
Initial Endowments are given by
Person A has 40 units of good X and 20 units of good Y.
Person B has 30 units of good X and 20 units of good Y.
Suppose Py = 1,
a) What is the value of Py that will result in a competitive equilibrium? (Ans: Py=1/3, but I don't know why)
b) How much of each good will each consumer demand in equilibrium
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