Question

Hello Tutor,

Could you solve part d of this question for me ASAP. I need to see how the diagrams will look like.

Thank you.

Person 1 and 2 are the only two individuals in an exchange economy. Each person drives utility from the consumption of two goods, x and y. Their utility functions are: 1. Person 1: U1 = xfyl-u Person 2: U2-x'' y," where (Xi,y) is consumption bundles of individual i E (1,2). The initial endowment bundles are: Person 1: (xgf.yt) Person 2: (x2,y2) Drive the utility maximizing consumption bundles of two individuals as functions of the price ratio and the quantities of their initial endowments. Obtain the excess demand functions for both goods. Obtain the competitive equilibrium price ratio in this exchange economy. Let(x,yf)= (40,80), (趷3D= (80,40), α=8,β=2 a. b. c. d. In separate diagrams, show indifference curves (with consumption bundle) and the initial endowments of each person. In an Edgeworth box diagram show the equilibrium allocations of good x and y. a. b.

Answer 1

Solution:

Note: As requested, the solution contains only the graphs, and no solving part for the question.

Hope you find the solution helpful. Thank you!