d)An exchange economy has two goods (apples, bananas) and two types of agents(1, 2). Endowment of agent 1 is (3 bananas, 3 apples), and endowment of agent 2 is (4bananas, 2 apples). Both goods are divisible goods, so that it is possible to consume frac-tions of each good (e.g. 4.92 bananas and apples). Each type 1 agent's preferences arerepresented by the utility function U(x,x) = min{x, x}, where x and x denote theagent's consumption of bananas and apples, respectively. Each type 2 agent's preferencesare represented by the utility function U(x3, x²) = 7min{x3, x4} where x and r² denotethe agent's consumption of bananas and apples, respectively.Use an Edgeworth's Box to depict the set of Pareto efficient allocations in this economy.Please capture consumption of bananas on the horizontal axis.

Pareto efficient: It is that allocation (A) where there doesn't exist any allocation which is pareto…

d) An exchange economy has two goods (apples, bananas) and two types of a agents (1, 2). Endowment of agent 1 is (3 bananas, 3 apples), and endowment of agent 2 is (4 bananas, 2 apples). Both goods are divisible goods, so that it is possible to consume frac- tions of each good (e.g. 4.92 bananas and apples). Each type 1 agent's preferences are represented by the utility function U(x,x) = min{x, a}, where x and a denote the agent's consumption of bananas and apples, respectively. Each type 2 agent's preferences are represented by the utility function U(x,x) = 7min{r, a) where x3 and r² denote the agent's consumption of bananas and apples, respectively. Use an Edgeworth's Box to depict the set of Pareto efficient allocations in this economy. Please capture consumption of bananas on the horizontal axis.

d) An exchange economy has two goods (apples, bananas) and two types of a agents (1, 2). Endowment of agent 1 is (3 bananas, 3 apples), and endowment of agent 2 is (4 bananas, 2 apples). Both goods are divisible goods, so that it is possible to consume frac- tions of each good (e.g. 4.92 bananas and apples). Each type 1 agent's preferences are represented by the utility function U(x,x) = min{x, a}, where x and a denote the agent's consumption of bananas and apples, respectively. Each type 2 agent's preferences are represented by the utility function U(x,x) = 7min{r, a) where x3 and r² denote the agent's consumption of bananas and apples, respectively. Use an Edgeworth's Box to depict the set of Pareto efficient allocations in this economy. Please capture consumption of bananas on the horizontal axis.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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