Question

Extra Credit: This problem is worth 10 extra points on top of the 100 total points in the exam. However, even if you correctly answer this question, your total score is still capped at 100. (10 points) Suppose Arijit (A) and Jon (J) are the only two consumers of two kinds of goods X and Y Arijit and Jon each has utility function such that the Marginal Utility of X is criven by y, and the Marginal Utility of Y is given by X. Thus, for Arijit, the slope of his once curve is given by YAXA, where the subscript indicates that this is the amount of the goods consumed by Arijit. Similarly, the slope of the indifference curves for Jon is VY/X. Suppose that there are in total 200 units of X and 200 units of Y available. locations of X and Y will satisfy Consumption Efficiency? Show your work

Answer 1

Consumption efficiency PRSA = Rss YA XJ = XA XJ - 0) Xe t XT = 20 6 ) YA+ Yg = 200 - Let we affume [XA = xs) and YA = Y3 - [ XA = 1001 [X5 =100 YA 5100 Y5 = 100

=) . It isatisfies all the Equations (1), (i 14 lii) and it also satisfied the consumption ettriciency.conditions. 1A = (10,100), 5=(167,100)