Question

Consider an exchange economy with two people (Ann, and Bob) and two goods (apples, and bananas). Ann and Bob have the following utility functions: uA = min (XA1 , 2XA2) (XA1 is Ann's consumption of apples, and XA2 is her consumption of bananas) uB = XB1 . XB2 (XB1 is Bob's consumption of apples, and XB2 is his consumption of bananas) Ann's initial endowment is 15 apples and 5 bananas and Bob's initial endowment is 5 apples and 5 bananas. Which of the following statement(s) is true? (i) Initial allocation is Pareto Optimal (ii) Bob consuming 18 apples and 9 bananas is Pareto Optimal (iii) In the competitive equilibrium, price of apple is twice the price of banana (iv) Ann consuming 10 apples and 5 bananas is competitive equilibrium

          Consider an exchange economy with two people (Ann, and Bob) and two goods (apples, and bananas). Ann and Bob have the following utility functions:
uA = min (XA1 , 2XA2) (XA1 is Ann's consumption of apples, and XA2 is her consumption of bananas)
uB = XB1 . XB2 (XB1 is Bob's consumption of apples, and XB2 is his consumption of bananas)
Ann's initial endowment is 15 apples and 5 bananas and Bob's initial endowment is 5 apples and 5 bananas.
Which of the following statement(s) is true?
(i) Initial allocation is Pareto Optimal
(ii) Bob consuming 18 apples and 9 bananas is Pareto Optimal
(iii) In the competitive equilibrium, price of apple is twice the price of banana
(iv) Ann consuming 10 apples and 5 bananas is competitive equilibrium

Consider an exchange economy with two people (Ann, and Bob) and two goods (apples, and bananas). Ann and Bob have the following utility functions:
uA = min (XA1 , 2XA2) (XA1 is Ann's consumption of apples, and XA2 is her consumption of bananas)
uB = XB1 . XB2 (XB1 is Bob's consumption of apples, and XB2 is his consumption of bananas)
Ann's initial endowment is 15 apples and 5 bananas and Bob's initial endowment is 5 apples and 5 bananas.
Which of the following statement(s) is true?
(i) Initial allocation is Pareto Optimal
(ii) Bob consuming 18 apples and 9 bananas is Pareto Optimal
(iii) In the competitive equilibrium, price of apple is twice the price of banana
(iv) Ann consuming 10 apples and 5 bananas is competitive equilibrium

Added by Kenneth R.

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