Skip to content
We use only essential cookies to keep you signed in and remember your preferences. See our Cookie Policy.
TestStop
MocksPracticeResourcesIndiaBlogPricing
Sign in
Questions › DSE › DSE 2004 › Q4
2 marks, −1Microeconomics › General equilibrium and exchange economies › Competitive equilibrium in an exchange economyHardabout 3 min

DSE 2004 Question 4: General equilibrium and exchange economies

For the exchange economy with Agent 111 endowment (1000,0)(1000,0)(1000,0), Agent 222 endowment (0,1000)(0,1000)(0,1000), and each maximizing min⁡{xi,yi}\min\{x_i,y_i\}min{xi​,yi​}: the set of all competitive equilibrium allocations consists of allocations of the form (x1,y1)(x_1,y_1)(x1​,y1​) and (x2,y2)=(1000−x1, 1000−y1)(x_2,y_2)=(1000-x_1,\,1000-y_1)(x2​,y2​)=(1000−x1​,1000−y1​) where

Tap an option to check your answer.

Answer and worked solution

Checking your account…

Plain-text version

For the exchange economy with Agent 1 endowment (1000,0), Agent 2 endowment (0,1000), and each maximizing min {xᵢ,yᵢ}: the set of all competitive equilibrium allocations consists of allocations of the form (x₁,y₁) and (x₂,y₂)=(1000-x₁, 1000-y₁) where (A) x₁=y₁=500 (B) (x₁,y₁)=(1000,0) and (x₁,y₁)=(0,1000) (C) x₁=y₁, for x₁∈[0,1000] (D) x₁∈[0,1000] and y₁∈[0,1000]

Also written as: For the exchange economy with Agent 1 endowment (1000,0), Agent 2 endowment (0,1000), and each maximizing min {x_i,y_i}: the set of all competitive equilibrium allocations consists of allocations of the form (x_1,y_1) and (x_2,y_2)=(1000-x_1, 1000-y_1) where

General equilibrium and exchange economies has come up 69 times in 7 exams since 2004.

What this question tests

This question is on Competitive equilibrium in an exchange economy, part of General equilibrium and exchange economies in Microeconomics.

Finding the prices at which every consumer's chosen bundle clears the market.

TestStop has 26 past-paper questions on this subtopic; the nearest in year are below.

  • IIT JAM 2021 · Q51Amar has endowment F_A = 2, W_A = 5 and utility U_A = f_A² w_A. Barun has endowment F_B = 8, W_B = 5 and…
Practise General equilibrium and exchange economiesMore on Competitive equilibrium in an exchange economy

Similar questions from other papers

  • CUET-PG 2026 · Q2_ Curve shows the all efficient allocation of goods between two consumers, or of two inputs between two production functions.
  • IIT JAM 2026 · Q6Which one of the following statements is CORRECT for the general equilibrium analysis for a two-person and two-good pure exchange economy?
  • GATE 2025 · Q58Consider a two-person exchange economy where two goods, x and y are available in limited quantities of 50 and 100, respectively. The preferences of the two persons…
  • CUET-PG 2024 · Q18In a 2x2 general equilibrium model of exchange with goods X and Y and two consumers 1 and 2, both of whom have a weakly positive endowment of X and Y, in the exchange…
  • GATE 2024 · Q46Consider a two good economy where a denotes consumption of apricots and b denotes consumption of bananas. Anu's utility function is U^(Anu)(a,b) = a+2b, and Binu's…

Question from the DSE 2004 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.