Question 1 consider a two-period two-person pure exchange, Ask an Expert

Economics

Question 1: Consider a two-period, two-person pure exchange economy. Utility functions and
endowments are given as follows.
u1(x0; x1) = (x0x1)2 and e1 = (18; 4)
u2(x0; x1) = ln x0 + 2 ln x1 and e2 = (3; 6)
1. Characterize the set of ecient allocations as completely as possible.
2. Describe an Arrow-Debreu environment for this economy, explaining when markets are
open, who trades what with whom, and so on. Dene an Arrow-Debreu competitive
equilibrium (AD equilibrium, for short).
3. Find the unique AD equilibrium of this economy.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9509697

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