In an exchange economy with agents 1 and 2 and goods and , agent 1 lexicographically prefers good (of two bundles she strictly prefers the one with more ; if is equal, the one with more ), while agent 2 lexicographically prefers good . Suppose 1's endowment is and 2's endowment is . The vector is a competitive equilibrium vector of prices if and only if:
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In an exchange economy with agents 1 and 2 and goods x and y, agent 1 lexicographically prefers good x (of two bundles she strictly prefers the one with more x; if x is equal, the one with more y), while agent 2 lexicographically prefers good y. Suppose 1's endowment is (10,0) and 2's endowment is (0,10). The vector (pₓ,p_y) is a competitive equilibrium vector of prices if and only if: (A) pₓ=1=p_y (B) pₓ>0 and p_y>0 (C) pₓ>p_y>0 (D) p_y>pₓ>0
Also written as: In an exchange economy with agents 1 and 2 and goods x and y, agent 1 lexicographically prefers good x (of two bundles she strictly prefers the one with more x; if x is equal, the one with more y), while agent 2 lexicographically prefers good y. Suppose 1's endowment is (10,0) and 2's endowment is (0,10). The vector (p_x,p_y) is a competitive equilibrium vector of prices if and only if:
General equilibrium and exchange economies has come up 69 times in 7 exams since 2004.
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.
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