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I. Consider a two-person, two-good exchange economy in which

Paper help Economics I. Consider a two-person, two-good exchange economy in which

Economics

I. Consider a two-person, two-good exchange economy in which

I. Consider a two-person, two-good exchange economy in which the utility functions are Ui (x1i,x … Show more I. Consider a two-person, two-good exchange economy in which the utility functions are Ui (x1i,x2i) = x1i * x2i for i=1; 2 and the initial endowments are w1 = (1,3) for agent 1, and w2 = (3,1) for agent 2. a. Find the individual demand Di(p) for i=1,2 and the market excess demand E(p)? b. Show that any price vector p = (p1; p2) where p1 = p2 along with the allocation (x1; x2) where x1 = x2 = (2; 2) is an equilibrium? c. Keep everything the same except change the utility function to min{xi1,x2i}, find the new individual demand, and excess demand? • Show less

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