Question

#1 In a hunter-gatherer society lives 2 people, Adam and Eva. Adam is a hunter and catched 10 bears a week. Eva is a gatherer and he gathers 20 gigantic wildberries a week. Both Adam and Eva enjoy eating bears and wild-berries and have happiness function c1c2.

a) Under agreement "2 bear = 1 berry". How many bears does Adam want to sell? How many bears does Eva want to buy? Is this an equilibrium outcome?

b) What is equilibrium condition? Solve for equilibrium exchange rate. What do Adam and Eva end up consuming under this agreement?

Looking primarily for a budget line. I can probably figure it out after that, but I'm unsure how to get started here. Thanks!

Answer 1

Adam Eva Hunter Cateher n a week 10 bears Iiganbie wildberies 20 Hriness fendn (a)Under given Aeement 2bear 1 th en o bear 5 bery bary 2 bear 2 bear1 berr 1o bear Here 1 10 bear ? mul hpy terms CTOSS =beay loX 1 2 IAdam sell all his 1o beay he ony the gee s bay t Eva sells ( 01 C2 .tHone itis not eguilbrium Here

quilibnum, condhion shoull be (b For an Grauly Cz e Areement chenld a ear 20o ry lo be ar beries amsell all his io bear he 20 ue Ea sells all her wy all to bears berries dhe 20 ezuilotsiu Conditon