Q6 neededi need in wordsnot handwritten For Questions 5-7 below, consider the following description of a two-goods example:Assume two consumers with utility functions of the form1/2 1/2UX (x₁, x₂) = x/²x² and UX (y₁, 92) = y1Y2.Further, suppose that consumer X is endowed with wx = (6,2) and consumer Y with w = (2,6).Question 5. Assume the consumers face prices p = (1, 1). Determine the net demands for eachconsumer.Question 6. Assume the situation of an exchange economy.(a) Determine the contract curve as an expression in which good 1 (₁) is a function of good 2(T₂).(b) Provide a diagram that illustrates the contract curve and the core of the economy.(c) Determine the Walrasian equilibrium prices.Question 7. Provide general formulations of the First and Second Welfare Theorems for an ex-change economy and, using the specific exchange economy of this section, illustrate the theoremsin a diagram.

A state of the economy in which the market for all goods is clear, that is, the demand for all the…

Question 7. Provide general formulations of the First and Second Welfare Theorems for an ex- change economy and, using the specific exchange economy of this section, illustrate the theorems in a diagram.

Question 7. Provide general formulations of the First and Second Welfare Theorems for an ex- change economy and, using the specific exchange economy of this section, illustrate the theorems in a diagram.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Q6 needed

i need in words

not handwritten

For Questions 5-7 below, consider the following description of a two-goods example:
Assume two consumers with utility functions of the form
1/2 1/2
UX (x₁, x₂) = x/²x² and UX (y₁, 92) = y1Y2.
Further, suppose that consumer X is endowed with wx = (6,2) and consumer Y with w = (2,6).
Question 5. Assume the consumers face prices p = (1, 1). Determine the net demands for each
consumer.
Question 6. Assume the situation of an exchange economy.
(a) Determine the contract curve as an expression in which good 1 (₁) is a function of good 2
(T₂).
(b) Provide a diagram that illustrates the contract curve and the core of the economy.
(c) Determine the Walrasian equilibrium prices.
Question 7. Provide general formulations of the First and Second Welfare Theorems for an ex-
change economy and, using the specific exchange economy of this section, illustrate the theorems
in a diagram.

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