Question

Question 3 1 pts Let us introduce a second person, who has standard Cobb-Douglas utility ug = (x+3). (x?). Their endowments are wa = (6, 3) and W3 = (3,6). You may assume p2 = 3p. Find the amount person A consumes of good 1 in competitive equilibrium. Simplify decimals (no extra zeros). Question 4 1 pts Find the contract curve (the set of all Pareto efficient points) for the setting in question 3. BIU A Y HTML Editora • I = = = = = x x = = V box 12pt Paragra You Tube

Please answer number 4

Answer 1

4) We know contract curve is the set of points where indifference curve of both the individual are tangent to each other. It means MRS for A=MRS for B

MRS for B=MUx/MUy=X²_B/X¹_B=MRS for A

if A has same utility function then contract curve X²_B/X¹_B=X²_A/X¹_A