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Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers ...

MrGrimey

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Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers ...

Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences are described by the Cobb-Douglas Utility function:
US = BS1/3CS2/3
Andrew's preferences are given by:
UA = BA1/2CA1/2
Assume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA = 10, BS = 20, CA = 20 and CS = 10. Solve for the competitive equilibrium prices (relative prices) and quantities.

Textbook

Microeconomics: Theory and Applications with Calculus

Edition: 4^th

Author: Perloff

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SaHiN22

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More solutions for this book are available here

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Krista d.

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Thank you

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