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In a 2-agent2-goods pure exchange economy the tastes of the consumers are represented by the...

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Accounting

In a 2-agent2-goods pure exchange economy the tastes of the consumers are represented by the U1(x1 1,x1 2)=x1 1x1 2 and U2(x2 1,x2 1)=x2 1x2 2 utility function. The endowment vectors of the consumers are e1=20,5and e2=(10,10) respectively.

aGive the set of feasible allocations in this economy and sketch the corresponding Edgeworth-Box.

b)Fix the utility level of the second consumer to that of the endowments provided and solve the Social Planners Problem. Also determine the contract curve of this economy.

cDetermine the Core of the economy.

d)Determine the general competitive equilibrium and the equilibrium allocation in this economy.

e)Show that the first welfare theorem holds in this economy.

Note:U1(x1 1,x2 1) and the other that write like this form, all of them are vertical 1 1, not parallel1 1, that's a kind of data representation.

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