Question:
Consider a 2-agent, 2-good exchange economy where agent π has utility function π’π (π₯π , π¦π ) = max{π₯π , π¦π }, π = 1,2. The initial endowments of goods π and π that the agents have are (π₯Μ
Μ
1Μ
, π¦Μ
Μ
1Μ
, π₯Μ
Μ
2Μ
, π¦Μ
Μ
2Μ
) = (25, 5, 5, 5). Then select the CORRECT choice below where the price vector (ππ₯, ππ¦) specified is part of a competitive equilibrium.
Consider a 2-agent, 2-good exchange economy where agent π has utility function π’π (π₯π , π¦π ) = max{π₯π , π¦π }, π = 1,2. The initial endowments of goods π and π that the agents have are (π₯Μ
Μ
1Μ
, π¦Μ
Μ
1Μ
, π₯Μ
Μ
2Μ
, π¦Μ
Μ
2Μ
) = (25, 5, 5, 5). Then select the CORRECT choice below where the price vector (ππ₯, ππ¦) specified is part of a competitive equilibrium.
Updated On: Oct 1, 2024
- (ππ₯, ππ¦) = (2,1)
- (ππ₯, ππ¦) = (2,2)
- (ππ₯, ππ¦) = (1,2)
- (ππ₯, ππ¦) = (4,2)
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The Correct Option is B
Solution and Explanation
The correct option is (B): (ππ₯, ππ¦) = (2,2)
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