Question

Ш. Consider the two-person, two-good economy given by 띠 (x) = 2011 + x12, wi and u2(x2)2+222 , w- where u讠 : R → R+, xi :-(zil, Xi2), and wi := (wil ,Wi2), i = 1, 2, are person i's utility function, consumption bundle, and endowment of the two goods, respeortively. 1. Find the set of competitive equilibrium allocations and corresponding prices, 2. Show that the individuals' marginal rates of substitution are not equal at any of the part-(a) allocations 3. Are any of the part-(a) allocations Pareto optimal? Explain, 4. N = 0,클 1) is the best ow suppose someone decides that a allocation, (X1, X2 5. Show how a could be achieved as part of a competitive equilibrium with lump-sum taxes and transfers

NOTE: It is a General Equilibrium (GE) question. Please answer all parts of the question. Thanks for the help.

Answer 1

ANS WER- value叮kis end Dument ndl are (1,i O# for idivi dua, ou- Bulat Li CI) attuiring MaT7inal utilities 'proM thu, udiliに1 ·bn.- , (at MU2P since givn He bilctr . ep ubtes e i wick haewrilL be CoTA Lf coruplet inco me will be· hpend, m He cheaper

0 Budaet lin will be 32 → 붓 業

MRS MU 2. MRS at we can d 2 国 No, att o cation sat past (A) Una at Pasto rpamal alla cations MRS 61 bot . 사 灿 both uitys ose

thamt one T -uro T Delinition- aur is said to be an equilibrium uitん allo cath, = 3 Pi + o.PL2← 7mindǐ버dual 1) For indiridu al CL) → veatt taaters for 2 as ue can