Question

This Problem is from "Advanced Microeconomic Theory – Geoffrey Jehle, Philip Reny"

5.12 There are two goods and two consumers. Preferences and endowments are described by

u1(x1, x2) = min(x1, x2) and e1 = (30, 0),

v2(p, y) = y/2

√

p1p2 and e2 = (0, 20),

respectively.

(a) Find a Walrasian equilibrium for this economy and its associated WEA.

(b) Do the same when 1’s endowment is e1 = (5, 0) and 2’s remains e2 = (0, 20).

Answer 1